Fraudulent ICOs Are Still Around

August 12, 2019

Fraudulent ICOs Are Still Around: New Jersey Regulator Just Froze Two of Them


After the ICO trend boomed back in 2017, it quickly started seeing its fair share of problems. Not only were there all kinds of projects emerging everywhere in the world - many of them weak and without a clear idea of what to do next — but many of them ended up being scams. This is not particularly surprising, as scammers are known to follow the money, and ICOs raised a lot of it two years ago.

Numerous other issues, like the fact that most coins are considered to be securities, caused the US regulator, the SEC, to intervene, and the infamous ICO crackdown took place. Because of this, as well as the drop in prices during 2018's year-long bear market, the ICO model nearly went extinct. Now, it seems like it made a comeback, although not as strongly as before.

However, the ICO is not the only thing that had returned with price recovery, as fake promises made by scammers can still be encountered today, as well. In fact, the New Jersey securities watchdog recently interfered after identifying two of them, immediately sending cease-and-desist order and breaking the token sale.

The two fake ICOs were known as Unocall and Zoptax, and they were trying to raise funds from retail investors via an online token offering. However, along the way, they triggered legislation against the sale of unregistered securities. According to the New Jersey regulator, both projects' coins were actually unregistered securities, and the projects were promising large payouts to those who choose to buy their tokens.

Gurbir S. Grewal, the Attorney General, stated that the regulator's recent actions demonstrate that the New Jersey watchdog stands ready to protect investors in case of unlawful ICOs and other crypto-related schemes. He added that the innovation in the crypto-related investment market should not let the market players forget that the rules still apply to everyone involved.

New Jersey regulator hunting fake ICOs via a special task force


Of course, this was not the first time that the state's regulator had interfered in fake crypto offers. Fraudulent ICOs often use aggressive, direct persuasion methods, which makes them rather easy to spot. The worst part is that they are targeting small-scale investors, who cannot protect themselves. This is why the Attorney General of New Jersey launched a special task force back in April 2018. The task force focused on inspecting token sales, seeking out fraud and breaking up fundraising.

In January 2019, this drive to check crypto projects evolved into Operation Cryptosweep. So far, the task force seems to have been very successful, opening as many as 85 enforcement actions on various crypto projects and ICOs. They made over 330 inquiries and investigations in regards to projects registered in Canada and the US, meaning that nearly one-fourth was breaking the law in one way or another.

As mentioned, the ICO sector is now significantly slower than back in late 2017, and most investors are far more likely to participate in IEOs (Initial Exchange Offerings). However, ICOs are still not gone completely, and there are people willing to try their luck and invest in them, even though these are mostly small-scale investors.

Bureau Chief, Christopher W. Gerold, believes that the refreshed interest in ICO investing comes as a consequence of the increase in the price of Bitcoin, as well as the announcement of Facebook's Libra. New investors are not aware of the danger, and even some of the older ones can be tricked by these projects, which is why the regulators once again urge caution.

Author: Ali Raza for: Crypto-Rating.com
Cryptocurrency: Ethereum

Kik vs. SEC
Kik vs. SEC

It is widely known that the US SEC does not have a great opinion about cryptocurrencies. In fact, it believes that most of them are securities, and as such - unlawful, since they do not follow security regulations. This has been a cause...

Venezuela: Bitcoin Trading at All-Time High
Venezuela: Bitcoin Trading at All-Time High

When times get extremely tough, Bitcoin may come to the rescue. Proven by the people of Venezuela, a long-suffering country which is about to immerse...

Major Filipino Bank Launches Own Cryptocurrency
Major Filipino Bank Launches Own Cryptocurrency

The Union Bank of the Philippines, also referred to as UnionBank, the seventh-largest financial institution of this archipelagic country...

Crypto Projects Are Getting Rid of Their ICO-Gained ETH Coins
Crypto Projects Are Getting Rid of Their ICO-Gained ETH Coins

According to a recent analysis, it seems that ICO projects that accepted ETH coins during their token sales are slowly but surely emptying their wallets...


BAT tipping comes to Twitter
BAT tipping comes to Twitter

Basic Attention Token (BAT) has seen a lot of popularity in the last two years. The token is known for having one of the fastest ICOs in history before Binance Launchpad came...

Anti-ICO Chairman of South Korea's FSC Suddenly Resigns
Anti-ICO Chairman of South Korea's FSC Suddenly Resigns

Recent reports from South Korea had seen the head of the country's FSC (Financial Services Commission) give a sudden resignation last week...

KICKICO Ecosystem About to See Launch
KICKICO Ecosystem About to See Launch

The development of cryptocurrency and blockchain sectors advances rapidly, with the most recent example being the pending launch of KICKICO's own ecosystem...

Leave Libra, Urges Open Markets Institute
Leave Libra, Urges Open Markets Institute

As it turns out, government officials and members of the G7 are not the only ones who came down with criticism on Facebook and its much-discussed digital currency...