The U.S. states of Colorado and North Dakota have independently issued cease and desist orders against companies promoting initial coin offerings in their states. Their tokens are potentially fraudulent securities offerings, according to the two states’ securities commissions. One scheme promises a return of 10 percent per month and claims to be pegged to the price of gold.
Colorado Targets Two ICOs
Colorado Securities Commissioner Gerald Rome signed two final orders on Oct. 12, directing a pair of companies to cease and desist offering or selling unregistered securities in the form of initial coin offerings (ICOs) in his state.
Davor, which issues Davorcoin, and Cyber Capital Invest, which offers the CCI token, “received the orders as a result of an investigation into potentially fraudulent securities offerings in Colorado in the form of ICOs,” the state’s Division of Securities announced.
According to the regulator, the ICOs offered by the two companies are not registered in Colorado or exempt from registration. Nonetheless, they were offered to residents of the state without full and fair disclosure of the risks associated with them.
Davorcoin’s website describes the token as a new cryptocurrency aiming to become an alternative to coins such as bitcoin and ether, the securities division explained, noting:
Investors were promised returns as high as 10 percent per month for participating in a ‘staking pool’ and were told that davorcoins are pegged to the price of gold and can be traded on exchanges.
Cyber Capital Invest’s website states that the CCI token is a “profit share token” allowing investors to receive a guaranteed daily return of between 0.75 and two percent based on the “access level” they select.