Colorado Department Of Regulatory Agencies Investigating Three Crypto Firms

ICO News, News, Regulation | August 29, 2018 By:

Three crypto firms alleged of promoting unregistered initial coin offerings (ICO) have been ordered to show cause by Colorado Securities Commissioner Gerald Rome. An order to show cause is a court order requiring recipients to justify, explain, or prove something to the court.

The orders come as part of a state investigation into “what has become a trend of allegedly fraudulent companies looking to make quick money,” according to the press release issued by the Colorado Department of Regulatory Agencies (DORA). The investigations are being conducted by members of the Division of Securities of DORA and the state’s ICO Task Force, which was set up in May to identify companies or individuals that might pose a risk to Colorado investors.

The companies that received the orders are Bionic Coin, Sybrelabs – also known as CryptoARB, and Global Pay Net – also known as GLPN Coin and GPN Token. DORA has previously submitted orders to EstateX, Bitconnect Ltd., Magma Foundation, and Bitcoin Investments Ltd.

Bionic Coin’s website, which is accessible by Colorado residents, is promoting an ERC20 token, called BNC, that is aimed at enabling “instant payments to anyone, anywhere in the world, and to simplify the purchase of electronic devices and software.” The site claimed that “Bionic will grow your money without any effort.”

“The site has information regarding the sale of its tokens, a whitepaper, blogs and frequently asked questions,” the release said. “The site also lists supposed media partners such as Forbes magazine, but investigators could not locate any reference to such a company or product on the sites purportedly promoting it. The site also attempts to incentivize users to promote Bionic by stating that individuals who post to popular social media sites and blogs will receive up to ten thousand tokens per post. There is no physical address or control person identified on the site.”

Sybrelabs promoted an unregistered security to Colorado residents via a type of investment pool which reportedly allowed for trading on crypto exchanges through what was advertised as a “cryptoarbitrage robot.” Its website offers large percentages of profits for minimum participation of $25, up to soliciting ‘active investment portfolios’ of $25,000 or more. Like Bionic Coin, it also encourages its members to promote the investment pool and recruit other members by providing them with marketing materials and souvenir products.

Global Pay Net is marketing an ICO for GLPN Coins, which reportedly provide an international financial platform based on blockchain technology. GLPN Coins are described as “full-value assets that represent one’s share in the business” and that “investors receive 80 percent of the company’s profits.” The firm’s website lists multiple crypto professionals as being involved. However, DORA said two of them have denied involvement in the project.

A DORA spokesperson said in a statement that the hearing to show cause occurred on August 24, and none of the companies listed responded.

“There likely won’t be another hearing,” the spokesperson said. “Given that no respondents showed, the Division presented the case to an administrative law judge, who must determine within 2 weeks whether the case made by the Division represents factual evidence. At that point yes, the Commissioner will then issue cease and desist orders.”