Gerald Rome, the Colorado Securities Commissioner, and the Department of Regulatory Agencies (DORA) have a requirement for startup planning on launching ICO to register so that a form of security is available to potential investors.
Local media outlet, Colorado Springs Business Journal, reported that Romes created DORA’s ICO Task Force to hinder and deter potential scams masked as ICOs by requiring companies comply with a thorough investigation. With this new regulation in place, three businesses had failed to register their ICOs before they were offered to the public and consequently were served with cease and desist orders.
The three company served, were Bionic Coin, CryptoARB, and Global Pay Net.
Bionic Coin was planning on launching Bionic (BNC) which hearld that it could complete instant global transactions for the purchase of electronic devices and software. Bionic Coin also offered huge incentives for potential members if they were to help spread the company’s marketing message through social media, even going so far as offering 10,000 tokens for each of them.
CryptoARB, a UK-based company, offered an investment pool to Colorado residents which stated that those in the pool could trade on crypto exchanges by using their ‘crypto arbitrage robot.’ CryptoARB also promoted to its users to financially contribute and recruit new members, similar to an multilevel marketing tactic, with the incentive of a substantial reward in exchange.
Global Pay Net is a company that touted a blockchain-based international financial platform and they promoted an ICO which offered ‘GLPN Coins’ before receiving the order in Colorado.
Similar to the other two companies, Global Pay also incentivize their clients with rewards for marketing the platform online. The company claims to be registered in Washington state, and it appears to have filed with the United States Securities and Exchange Commission in 2011, however the info on the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) is outdated.
With the popularity of ICOs as a way for startups to raise funds in order to create their projects, it seems that just as many are looking to ICOs as a way to scam uninformed investors. With constant news about scams being revealed, it’s easy to see way Colorado is taking these measures.