Government agencies around the world closely monitor initial coin offerings. In the state of North Dakota, the Securities Commissioner has ordered several projects to shut down. This pertains to BitConnect and its related companies, as well as Magma Foundation and Pension Rewards Platform. All firms specialize in ICO investments without registering with the state.


Another Cease and Desist for BitConnect

Cryptocurrency enthusiasts are all too familiar with the BitConnect project. This investment scheme caused millions of dollars in financial losses to investors globally. It is no longer active and trading of the BCC token has been shut down a while ago. North Dakota’s Securities Commissioner Karen Tyler has now issued a cease-and-desist against this Ponzi scheme and its affiliated companies.

Albeit this move should have happened sooner, it is not the only company being targeted. Magma Foundation and Pension Rewards Platform are also on the radar. Government officials express concerns over their ICO business model. Additionally, none of these projects is registered with the state. In the case of BitConnect, they sold fraudulent securities. The two other companies may face similar charges, depending on the outcome of the investigation.

It is the first time North Dakota’s ICO Task Force takes enforcement action. This unit was created by Tyler in August of 2018. Their main purpose is to investigate potentially fraudulent ICOs posing a risk to investors in North Dakota state. With three companies already identified, a first success has been noted. The unit will continue to monitor the ICO industry and take action when necessary.

cease and desist

The Wider ICO Crackdown

According to official sources, the ICO Task Force is investigating seven additional companies. That brings the total of suspicious ICOs in North Dakota to 10. Once cases are closed, further investigations will be launched. For the ICO industry, that confirms a lot of projects are either unregistered or potentially fraudulent. This has been a problem in this nascent industry since its inception years ago.

North Dakota joins other US states in this ongoing ICO crackdown. Colorado, North Carolina, and Texas are all pursuing companies not registering with the required officials. Any company claiming to provide their own token needs to be reviewed and vetted accordingly. Not all opportunities are legitimate, and the fraudulent schemes need to be removed at an early stage. A lack of disclosing material financial and risk information to investors is a common denominator among projects under investigation in North Dakota.

Hype and excitement are two contributing factors to initial coin offerings’ chances of success. This has attracted the attention of criminals and fraudsters. Investors are not always conducting sufficient research prior to making financial commitments. Those with nefarious intentions will take advantage of this lackluster approach sooner rather than later. Without government intervention, the initial coin offering industry remains a virtual Wild West. A crackdown on potentially fraudulent ICOs is warranted, now even more than ever before.

Have you been the victim of a fraudulent ICO? Let us know in the comments below.


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