cryptocurrency

Cryptocurrency companies issued cease and desist orders


The orders are the result of investigations conducted by the North Dakota Security Department’s ICO Task Force, convened by the commissioner to identify ICOs and cryptocurrency-related investments that pose a risk to North Dakota investors.

The effort is also part of Operation Crypto Sweep, a coordinated multi-jurisdiction investigation and enforcement effort involving more than 40 U.S. and Canadian securities regulators.

The three companies promoting potentially fraudulent securities are BitConnect/BitConnect LTD/BitConnect International PLC, Magma Foundation/Magma Coin/Magma and Pension Rewards Platform/Pension Rewards.

An ICO is a financing method used by startup companies to raise capital. Most ICOs involve projects that are at the idea stage, as described in reports known as white papers.

Companies create a new virtual coin or token, which is then sold online to investors in the ICO, in exchange for cryptocurrency or fiat currency. Companies market their ICOs through their own websites, social media platforms and online marketplaces.

Common red flags of fraudulent ICOs include plagiarized white papers containing spelling and translation errors, fictitious executive teams represented by stock internet photos, fake business addresses and phone numbers, fake celebrity endorsements, the promise of no risk and high returns, false claims about securities law compliance and the promise of additional ICO tokens for promoting the deal and bringing in other investors.

Investors must also be cautious of hackers who “spoof” legitimate ICOs to intercept and steal investor money.

BitConnect, BitConnect LTD and BitConnect International PLC were previously served orders by several states including Colorado, North Carolina and Texas, alleging unregistered activity and fraud. The Bitconnect website remains active and is still accessible by North Dakota residents. The site offers cryptocurrency for sale titled “BitConnect Coin” or “BCC” and claims to be a platform designed for multiple income-producing investment opportunities.

Magma Foundation, Magma Coin and Magma operates a website that purports to have office locations in Manchester, U.K., and Denver. The company is the subject of a cease and desist order issued by the Colorado Securities Division, however, review of Magma’s website indicates the site is still active and available to residents of North Dakota. The website contains information related to the purchase of Magma Tokens representing an interest in gold and/or Exchange Traded Funds. The website contains allegedly fraudulent content, including images of people represented to be the Magma Foundation executive team, which in fact are not related to Magma and are assigned fake names.

Pension Rewards Platform, or Pension Rewards, is soliciting investors through their website which is accessible to North Dakota residents. The website falsely claims that their coins will multiply rapidly and produce a large profit for investors, and that the growth will “happen in no time.”



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