The Colorado Division of Securities posted a note this week about issuing “final” Cease & Desist orders pertaining to two companies promoting initial coin offerings (ICOs). The C&D referenced selling un-registered securities in the state.
Davor, offering the DavorCoin, and Cyber Capital Invest, offering CCI Tokens, have been under investigation for potentially offering fraudulent securities.
The state of Colorado said that DavorCoin was offered through a website accessible to Colorado residents that described DavorCoin as a “new cryptocurrency aiming to become an alternative to coins such as Bitcoin and Ethereum.” Potential investors were lured in by assurances of returns as high as 10% per month for participating in a staking pool. The DavorCoin was claimed to be pegged to the price of gold and was expected to be traded on an exchange.
Cyber Capital Invest and the CCI Tokens were described as a “profit share token” allowing investors to receive a “guaranteed daily return of between 0.75% and 2%. The returns were allegedly dependent on the “access level” selected by the investor.
Direct sales of CCI tokens were augmented by commissions pitched to individuals who promoted the crypto through a bounty program.
Neither coin was registered in Colorado nor exempt from registration.
It must be noted that Cyber Coin Invest and their CCI Tokens were rated 3.6 on ICOBench provided by 13 expert ratings. The ICO is apparently based in Estonia and is listed as restricted from offering to USA citizens.
The DavorCoin site claims to be “one of the most ambitious cryptocurrency projects.” It claims to have “been created by bankers and traders from major financial institutions (based in London, Paris and other EU cities).”
This investigation was part of a broad crackdown of rampant fraud in the cryptocurrency space. The Division of Securities, part of the Department of Regulatory Agencies (DORA), is part of an “ICO Task Force” created to identify these types of fraudulent offerings.
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