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According to a press release released on October 11, Karen Tyler, the North Dakota Securities Commissioner, has recently issued Cease and Desist Orders to three fraudulent companies in North Dakota.
The companies subjected to the orders, Crystal Token, Life Cross Coin (also known as LifecrossscoinGmbH), and Advertiza Holdings (Pty) Ltd., were allegedly involved in the promotion of unregistered and fraudulent securities in the form of Initial Coin Offerings.
This suspicion was confirmed after an extensive investigation conducted by the Department’s ICO Task Force, which was set up by the commissioner to identify companies involved in any transaction related to ICO and cryptocurrency that pose a risk to crypto investors in North Dakota.
Investigation showed that the fraudulent company has a token called CYL, which was supposedly an ERC-20 token on the Ethereum blockchain. The company promised investors and other crypto enthusiasts that they offer an evolutionary multi-utility token that could be used for the trade of other cryptocurrencies and a 2% interest daily. According to the report, the interest paid by staking the so-called CYL was paid in another token known as VCYL. Although the company was active in North Dakota, it was not registered to sell securities.
Advertiza Holdings (Pty) Ltd.
The supposed digital advertising company was found to defraud North Dakota investors of their hard earned cash by providing them with a virtual currency, TIZA or Tizacoin that allowed them to invest in the company with the promise of making a profit from the appreciation of the value of the token. The company claimed it had made a filing with the SEC when in fact, it was never registered to offer securities in North Dakota.
Life Cross Coin (LifecrosscoinGmbH)
Life Cross Coin, like the aforementioned companies, was found to engage in some fraudulent activities aimed at defrauding crypto investors in North Dakota of their hard earned cash. The company claimed that its virtual currency, LICO or Life Cross Coin, would be used to support charitable organizations. Innocent investors were made to believe that they would earn a huge return on their investment by holding the coins and selling them at a later date. Besides having fake representations on their website, the company was also found to be unregistered in North Dakota.
The crypto sphere encompasses a lot of alluring applications and this makes it a good target for financial criminals.
Startup companies usually use ICO as a means of raising funds for their projects. This makes it easy for financial criminals to manipulate some websites and defraud crypto investors of their hard earned cash.
With these recent fraudulent developments in North Dakota, the Commissioner has advised investors to be cautious of the investment they make.
The press release also went further to educate investors of some common red flags of fraudulent ICOs and these include:
- Fake celebrity endorsement
- Fictitious executive teams represented by photos from the internet
- Plagiarized white papers which usually contain some translation and spelling errors
- Promise of no risk and high returns
- False addresses and phone numbers
- Promise of additional ICO tokens for promoting the deal and referrals
- False claims about security law compliance, among others…