The State of Colorado, in the United States of America recently ordered some unregistered ICOs to stop promoting in the state. This is in a bid to stop the menace of fraudulent ICOs which have proliferated the cryptocurrency industry.
It is no news that the initial coin offering is facing trust issues. Coin offerings for some months now have been in the news for the wrong reasons. Cryptocurrency-based firms are thus facing a serious challenge, because the legitimate ones are now affected, due to the heap of scams and fraud that is threatening to kill the market.
In a bid to protect its citizens against fraud and scam, the state of Colorado, through the Colorado Securities Commissioner, Gerald Rome ordered three cryptocurrency firms, who were accused of promoting unregistered ICOs in the state to show cause.
An order to show cause is a type of court order that requires one or more of the parties to a case to justify, explain or prove something in court.
The state of Colorado, like most states in the United States, is very worried about the rate at which scammers go to defraud honest people, who want to invest and reap its dividends. The state has however identified Bionic Coin, Global Pay Net, and Sybrelabs as the three companies that have failed to meet up with the desired expectation, by not registering with the appropriate authorities and exaggerating its products and services to the people of the state.
The companies, according to the Colorado Department of Regulatory Agencies are ghost companies, who have no traceable address or contact. They mostly spread the gospel of their products via the numerous social media platforms, and build traffic by telling people to broadcast their posts and receive a certain amount of tokens.
The three companies have different methods at which they try to hoodwink their customers and different approaches to building traffic towards their products.
The state of Colorado is not new to the use of cryptocurrency. The state is very liberal towards cryptocurrency, and its policies are relatively liberal and can be considered crypto friendly.
The political bigwigs in the state were even touted to be on the verge of collecting Bitcoin and other types of cryptocurrencies in their campaign, according to Denver Post, on May 17.
The clampdown on the allegedly illegal ICOs will encourage the investors to have faith in coin offerings that is deemed healthy and also go a long way in reducing the number of ICOs fraud victims.