Bitcoin Investments in firing line as Colorado clamps down on crypto firms

Colorado State Securities Commissioner Gerald Rome has signed cease and desist orders against four Initial Coin Offerings for allegedly offering unregistered securities in the US state.

These are the result of investigations by an ICO Task Force, part of the Department of Regulatory Agencies (DORA), set up to investigate potentially fraudulent activity around investors “excited about the prospects of financial windfall through the cryptocurrency market”. The four orders target Bitcoin Investments (also doing business as DB Capital), PinkDate, Prisma and Clear Shop Vision.

Bitcoin Investments, no connection to Bitcoin.org, claims to be a “leading blockchain investment firm and one of the largest institutional owners of cryptocurrencies…manag[ing] over $700 million” across multiple funds. It says that investors can expect over 1% daily returns with additional returns on internal exchanges of the DB Token.

It also states that “the average registered investment return over a two-month period in 2017 was an amazing 95%.” The ICO, which lists a number of celebrity promotors such as NBA basketball player Carmelo Anthony, provides a wallet address where investors can send Bitcoin in exchange for DB Tokens.

The company also stands accused of “spoofing” a US Securities and Exchange Commission webpage, www.Howeycoins.com, that was set up to educate potential cryptocurrency investors about the associated risks. Bitcoin Investments’ site incorporates the same format, exact images, and an identical employee team. Despite access to the site by Colorado residents, the DB Token ICO has not been registered as a security with the Division.

Pinkdate, a company providing “anonymously-operated, worldwide escorting service[s]” at https://pinkdate.is, purportedly seeks to fundraise over $5 million through an ICO in a cryptocurrency referred to as PinkDate Platform (PDP). Through a whitepaper, it promotes a payout to investors of “50% of Net Profits through dividends,” provides an investor portal, and offers to provide dividends in the form of Bitcoin, Ether, Monero, or Bitcoin Cash.

The site claims that business operations “are designed to allow the core team to operate with anonymity,” and as such investigators were unable to identify a business location or any member of the team other than President Sara Stevens and a COO named Roger, with no last name given. Again, despite accessibility by Colorado residents, the ICO has not been registered with the Division of Securities.

Prisma’s website requires users to purchase the digital currency Prismacoin (PRIS) in order to use a proposed lending and arbitraging investment platform. The site claims that through the lending model investors can profit up to 27% on their initial investment, and the “arbitrage bot” can generate returns of up to 1.5% daily. The ICO, which constitutes a securities offering under the Colorado Securities Act, provides a whitepaper but does not disclose potential risks of the investment. Further, the offering has not been registered with the Division of Securities.

Clear Shop Vision’s website has offered three ICOs since June 2018. The venture aims to create a shopping ecosystem that saves time and money for users. The offered token, ORC Token, is represented as having “serious appreciation potential,” and the site directs investors to send Ether cryptocurrency directly to the company’s Ethereum wallet rather than through a cryptocurrency exchange. In addition to the general solicitation of an unregistered securities offering, the company also offers to pay users in ORC Tokens for promotion of the ICO on social media, translation services, and referrals.