Colorado’s ‘ICO Task Force’ Levies Orders Against 3 Crypto Startups

Colorado Securities Commissioner Gerald Rome

‘ICO Task Force’ Targets Project Marketing Fake Forbes Partnership

The officials are part of an “ICO Task Force” put together in May by Commissioner Rome with the mandate of identifying individuals and companies with fraudulent or unregistered businesses that present their customers with an investment risk. The three companies that are subject to the latest order are Bionic Coin, Sybrelabs Ltd., also known as CryptoARB, and Global Pay Net, also known as GLPN Coin and GPN Token.

Similar orders have previously been received by Bitcoin Investments Ltd., also known as DB Capital, EstateX, Bitconnect, and Magma Foundation, also known as Magma Coin. Bionic Coin promotes an ICO known as “Bionic” or “BNC,” and it promises to enable instant cross-border payments to anyone, as well as simplify the process of buying software and electronic devices. The ICO site offers investment-related information about the ICO including a timeline roadmap, a technical whitepaper, and FAQs.

It also makes promises of returns to investors, saying, “Bionic will grow your money without any effort.” On the site, a number of purported media partners are listed including Forbes magazine, but upon investigation it was discovered that no such reference to the company exists on any of the sites it listed. Users are also incentivized to promote the ICO on their social media accounts with promises of receiving up to 10,000 BNC tokens per post. Most significantly, the site has no associated physical address or control person identified.

‘Cryptoarbitrage Robot’

Sybrelabs Ltd., which claims to be based in Cambridgeshire, England, promotes an unregistered security in the form of an investment pool that allows users to trade on cryptocurrency exchanges through what is termed a “cryptoarbitrage robot.” According to Sybrelabs, this is a tool that allows the company to “automate many factors occurring with effective arbitrage on several instruments.” It offers huge profit percentages for a minimum participation of $25.00, and it solicits “active investment portfolios” of $25,000 or more. Like Bionic Coin, it encourages members to promote the scheme and its website also provides marketing materials including a PDF presentation, online banners, and souvenir products.

Global Pay Net markets an ICO purporting to sell “GLPN Coins,” which allegedly provide a blockchain-based international financial platform. It claims that GLPN tokens are “full-value assets that represent one’s share in the business” and that “investors receive 80 percent of the company’s profits.” Multiple cryptocurrency professionals and personalities are listed on the site, purportedly as having involvement in the project, but two of them have denied that this is the case.

It also claims that it has a filing with the SEC’s EDGAR database, but this cannot be verified because the phone number listed for the 2011 filing is disconnected, and no business filing is registered in Washington State where the company is supposedly located. Like the other two, it also offers inducements for individuals to promote it using their personal social media accounts, and it provides marketing materials on its website. Earlier, CCN reported that “Operation Cryptosweep,” an initiative of the North American Securities Administrators Association (NASAA), is actively investigating over 200 ICOs across the continent.

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Bitcoin Crime

https://www.ccn.com/colorados-ico-task-force-levies-orders-against-3-crypto-startups/

David https://markethive.com/david-ogden

NASAA launches an investigation into over 200 allegedly fraudulent ICOs

Not the NASA you were thinking about

The days of the pump and dump ICO may be numbered

: the North American Securities Administrators Association (NASAA) is on the warpath, taking action against potentially dodgy cryptocurrency schemes. In an announcement made yesterday, NASAA revealed it has opened over 200 cases investigating possibly illegitimate, illegal, and fraudulent ICOs and cryptocurrency related businesses since its launch in May 2018. All under the codename “Operation Cryptosweep.”

NASAA is a collective task force made up of representatives from the US, Canada, Mexico, Puerto Rico, and the US Virgin Islands. Its aim is to uncover illegitimate cryptocurrency scams, and protect potential unwitting investors. “State and provincial securities regulators are committing significant regulatory resources to protect investors from financial harm involving fraudulent ICOs and cryptocurrency-related investment products and also are raising awareness among industry participants of their regulatory responsibilities,” said NASAA President and Alabama Securities Commission Director Joseph P. Borg, in the announcement.

The point NASAA makes is that, if cryptocurrencies qualify as securities then they must be subject to, and apply for specific regulatory certification, or they must apply for exemption. Either way they must acknowledge this regulatory process in some way, the reality is, many do not. A full list of all those being investigated as part of “Operation Cryptosweep” can be seen here. It seems the primary reason for investigation is due to selling “unregistered securities.” The rise of the ICO presents a challenging future for cryptocurrency investors, and the general public alike. With a widely unregulated field, there are few safeguards to protect investors from dodgy scams.

At Hard Fork we recently reported how most of the top 100 cryptocurrencies don’t actually have a working product, giving investors no return for their money. What’s more, cryptocurrency exit scams exist, which specifically aim to raise money and run. They’ve illegitimately taken over $100 million from investors. Supposed regulation is one of blockchain and cryptocurrency’s most challenging issues right now. Whether for or against great control of our digital assets, hopefully “Operation Cryptosweep” will help to legitimize the field, and weed out the crooks.

Article Produced By

Matthew Beedham

https://thenextweb.com/hardfork/2018/08/29/operation-cryptosweep-ico-cleanup/

David https://markethive.com/david-ogden

SIX Group Executive Questions Launch of Crypto Trading, Expresses ICO Optimism Instead

David https://markethive.com/david-ogden

Indiegogo quietly canceled its first ICO after raising $5.2 million

Trouble in paradise

– but the good thing is that it appears investors will at least get their money back. In an email sent out in July, Indiegogo’s token brokerage partner, MicroVentures, informed investors they will not be receiving tokens – but refunds instead. From the looks of it, the reason for issuing refunds are recent changes in regulation.

Hard Fork has since obtained a copy of the message, which you can read below:

Thank you for participating in the FCFL pre-sale. If you have been following the crypto and ICO markets for the last 6 months you already know that the regulatory environment has been rapidly changing. The SEC has provided multiple comments regarding security and utility tokens, but has not provided formal guidance or a compliant framework on how to conduct these offerings.

During this time, your investment was not distributed to the company. This was done to ensure that MicroVentures navigated through the regulatory climate prior to finalizing the offering. While we believe the initial path taken was compliant, we have decided the best way to ensure compliance is to unwind the investment opportunity and return investor capital.

We are beginning the return process today.You may hear from someone on our team if we need to verify return instructions on how to return your investment capital to you.

Not to be mistaken with yesterday’s security token offering for the rich, Indiegogo announced plans to branch out into initial coin offerings (ICOs) in a statement last December. Given its success (and some failures) in the crowdraising sector, the expansion into token offerings seemed like a good fit. The guinea pig was the Fan Controlled Football League (FCPL), an Indiegogo alum seeking to raise up to $5 million to build a community-run football league. In return, the company promised to distribute tokens to their investors. The token distribution was to be overseen by Indiegogo’s partner, MicroVentures. The announcement gathered tons of attention from media outlets, securing coverage from Fortune, CNBC, CoinDesk, TechCrunch, and even The New York Times.

“We want to bring a brand of trust to the entire industry, which we think will bring [ICOs] to the mainstream,” Indiegogo co-founder Slava Rubin told The New York Times in 2017. “Now, we’re ready to become the go-to platform for selling and investing in digital tokens and blockchain-based assets, and we can’t wait for you to join us,” Indiegogo’s announcement added.

Indeed, FCFL boasted about exceeding its crowdfunding goals, raising the equivalent of $5.2 million “in Bitcoin, Ethereum, and classic fiat currency.” Unfortunately, the tokens were never distributed to investors. In fact, it appears MicroVentures did not even consult with FCFL prior to informing investors about the botched token sale. According to FCFL CEO Sohrob Farudi, MicroVentures initiated the refunding process without FCFL’s approval. (We contacted MicroVentures for a clarification, but representatives were not available for comment as of time of publishing.)

“We would like to address the recent email that we understand some of you received from MicroVentures,” Farudi said in a July statement, referring to the refund message shared above. “We did not consent to that email being sent out. We have no way to communicate directly with the purchasers who participated in our presale [sic] on MicroVentures platform as MicroVentures has refused to give us any information about who the purchasers are in order for us to communicate with them.”

“If you were a purchaser in the MicroVentures platform offering, FCFL would be happy to hear from you directly,” Farudi added. “We want to ensure that MicroVentures is handling this unwinding that it initiated properly and treating any purchasers in the MicroVentures platform offering fairly.” For the record, other than the St Regis Aspen Resort security token offering from yesterday, FCFL is Indiegogo’s first and only experience in the blockchain funding space. Speaking to The Verge in August, Rubin said the FCFL token sale “went well” – despite MicroVenture’s intention to issue refunds.

Asked about what went wrong with the FCFL ICO, Rubin told Hard Fork “the [MicroVentures] email issued to investors provides all the context for the refund.” “For clarification, Indiegogo partnered with MicroVentures in 2016, an SEC-registered [broker-dealer], to help market and amplify offerings on their platform to our global audience,” he further clarified in an email to Hard Fork. “Indiegogo itself is not a registered broker-dealer, and in the case of FCFL, or any other investment offering, does not participate in investment related activities.”

Meanwhile, Farudi insists FCFL is yet to be “given a valid reason as to why MicroVentures cannot complete the offering.” Not exactly what one would call a smooth execution. In all fairness, Indiegogo is hardly the only company to have back-pedalled on a scheduled token offering due to regulatory crackdowns. Indeed, tons of blockchain startups – including messaging giant Telegram – have had to abort their public token sales.

Article Produced By

Mix in Amsterdam

Mix is a tech writer based in Amsterdam that loves cinema and probably hates the movies that you like. Tell him everything you despise about his work on Twitter or pitch him your terrible ideas via email.

https://thenextweb.com/hardfork/2018/08/24/indiegogo-ico-blockchain-cryptocurrency/

David https://markethive.com/david-ogden

What Does It Take to Create a Good ICO Rating?

Some things are easy to rate.

If you go to a movie, you can make a ruling on how good it was based on your own enjoyment of the film, and perhaps on how good the cinematography and acting were. However, some things require some real work to rate accurately. ICOs are one such thing. Let’s take a look at what goes into developing an accurate and reliable ICO rating.

First, You Need an ICO List

In order to rate ICOs, you need to have a list of ICOs awaiting ratings. An ICO list on its own is a valuable tool for the cryptocurrency community, as it collects ongoing and upcoming ICOs in one place so potential investors have a great place to start their research. Especially given the difficulty of advertising an ICO, thanks to ad bans on most major platforms, it could be hard to find new ICOs to invest in without a list. Maintaining a list of ICOs requires having reliable web hosting, a well-designed website, and some method of updating your list, whether via inviting ICOs to submit themselves to your list, using a web crawler, or manually searching and adding ICOs that interest you. If you use user-generated or bot-generated content, you need to have a human on your team overseeing it in order to avoid the sort of sloppy, embarrassing errors that can occur without fact-checking.

Then You Need a Panel of Experts

For an ICO rating to have merit, it needs to have been created by someone with the credentials to judge the trustworthiness of the project. You could have a single expert do all of your ratings, but the staggering number of ICO projects out there might prove a daunting task for one person. Plus, if you have only one rater, they are only drawing on their own knowledge, and the ratings may also be influenced by their own biases. Ideally, you should have a panel of experts, drawn from several industries. Knowledge of cryptocurrency, business, law, and investment could all be beneficial for an ICO rater. Additionally, you might want to have some people on your team who are skilled at research and have a love of fact-finding, as it may take some digging to find all the details about an ICO’s team.

When choosing your panel, it’s imperative that you vet them thoroughly. Be sure that they actually have the experience and expertise that they claim to have. Only hire people who are suitable for the job. Resist the urge to give a job on your expert panel to an old friend or favorite cousin who needs work. Remember that when you make someone an expert on your site, you are vouching for their knowledge. It could reflect poorly on your site if you employ so-called “experts” who proceed to make uneducated comments about cryptocurrency on social media, or use their position at your company to get speaking engagements or jobs for which they are not qualified. There are two approaches you can take to having a rating panel. One is to share the identities of everyone involved, in order to showcase their expertise. The other is to keep your rating board anonymous, in order to protect them from bribery and harassment. Both are equally valuable, and you may want to discuss with your potential raters what they would prefer before making a final decision.

You Need to Establish Your Criteria

To bring it back to the movies, different genres are judged on different criteria. You would judge a comedy on how funny it was, but that’s not really a concern for a documentary. ICOs, on the other hand, should all be judged by the same criteria, and an ICO rating site should apply those standards evenly.

Some sample criteria include the quality of the ICO’s team, the merit of their idea, and how realistic their goals are. A rating might also take into account marketing and social media engagement. While many industries might consider a receptive online audience to be nice but not always necessary, an ICO’s audience says a lot about them. If the project has been received well by the cryptocurrency community, it speaks well to its potential success. On the other hand, if a project appears to only be gaining traction with crypto-newbies who are convinced they’re going to get rich, it may not be a trustworthy ICO. Your criteria should be clearly displayed and explained, so users of your site understand why a particular ICO has been rated as good or bad. After all, different potential investors will be more or less risk-averse, and some may see certain criteria as less important than others.

You Need to Research, Research, and Research Some More

Remember that team of experts you hired earlier? They’d better enjoy researching, because there are so many things that need to be investigated before rating an ICO. Just considering an ICO’s team, you first have to determine if the people who are listed as being involved in the project are actually involved in it. If they don’t list the project on their LinkedIn profiles, are they not actually affiliated with the program, or are they ashamed of their involvement? Either one is a definite red flag. It’s not enough to just discover if someone actually works for an ICO, though. You also have to follow up and see if they actually have the experience and skills they claim to have. Are they qualified for their role at the ICO?

Beyond that, your team will need to read the whitepaper to determine its quality and the validity of the proposed project. They’ll have to check GitHub repositories to inspect the project’s code. Someone will need to have a look at how well the project is engaging with investors on social media. Of course, if all of that seems like too much work, you could just do a surface-level amount of research, make a rating based on your initial impressions, and then suffer the fallout when you inevitably give a good rating to an obvious scam.

You Need to Choose an ICO Rating System

How will your ratings be expressed? The most popular options appear to be rating them on a scale of 1-10, or 1-5, or using letter grades. However, you could come up with your own unique rating system if you wish to stand out. Whatever you use, it’s important to make it clear and easy to understand if you want your ICO listing and rating site to be popular. It’s also beneficial to prominently display the rating, as we live in the “too long, didn’t read” era. Many people will simply scan the ratings without reading the more detailed information. Additionally, the crypto community is international and multilingual. You may have visitors who have only limited literacy in your native language, so be sure your ratings can be understood even through a language barrier.

You Need to Stand By Your Ratings

If you’ve chosen a good team, a good set of standards, and good research procedures, you should be confident in your ratings. You shouldn’t change them based on how other sites have rated the same ICO, pressure from the ICO’s team, or a discreet payment under the table. This means you need to own up to your mistakes, too. While most scams can be spotted with proper research, the crypto community has been rocked by a few instances of legitimate-seeming, promising projects turning out to be well-executed exit scams. When this happens, some sites are quick to rush in and change their ratings to lower than before, so they can pretend that they saw it coming all along (as long as no one has any pesky screenshots to prove them wrong).

Admitting your mistakes is an important part of growth. If you give a good rating to a project that your team couldn’t find any flaws in, and it turns out to be a scam, use this as a learning experience. Was there some area of research you had neglected that could have turned up some dirt? Did the scammers use some particularly clever ruse that you can look out for from now on? Integrity stands for a lot in this industry. Stand by your ratings, and stand by your team. That said, also expect the best from your team. If you discover that someone is accepting payments to change their ratings or otherwise engaging in shady behavior, you are responsible for cleaning house. Even one corrupt rater on a team of dozens can tarnish your sites reputation.

Finally, You Need to Spread the Word About Your ICO Listing

There are already a lot of sites out there which list and rate ICOs. If you’re new to the field, you’ll have to work hard to establish a good reputation. The same bans that stop ICOs from being able to advertise on the major social media platforms may impact you as well. In fact, before you expend all the effort to make a rating system for ICOs, ask yourself… “What am I bringing to the field?” Do you have a special area of expertise, or a great idea for how to improve on the existing model? Then go for it! Otherwise, you may want to ask yourself if your talents might be better applied to some other aspect of the crypto industry.

Article Produced By
Cointelegraph
Yavin

Yavin is the Founder and CEO at Cointelligence, the data layer for the crypto economy. He has extensive experience as a serial entrepreneur and an angel investor, as well as more than 20 years of experience in the tech industry. Having earned the reputation of crypto expert, On continues to contribute to this industry in ways that advance cryptocurrencies and blockchain technologies. On uses his deep hands-on experience and knowledge of SEO, PPC, and ORM to create successful online marketing strategies for ICOs, crypto, and blockchain companies.

https://cointelegraph.com/press-releases/cambodian-crypto-exchange-applies-for-a-license-to-become-the-first-legally-certified

David https://markethive.com/david-ogden

4 Founders Reveal Secrets Behind Wildly Successful ICOs

ICOs can be daunting to execute, so it’s best to learn from founders that have been there, done that.

Launching an ICO is a Daunting Process

                                   4 founders that have run successful ICOs

We spoke to 4 founders that have run successful ICOs about what they deem to be important when launching ICOs, how
to best go about approaching such a gargantuan task and some of the issues they encountered when doing so. (From left
to right, top to bottom: Jack Yeu, Co-Founder and CCO of Switcheo Network; Christel Quek, Co-Founder and CCO of BOLT;
Val Yap, Founder and CEO of PolicyPal Network; Stephen Hyduchak, Founder and CEO of Bridge Protocol)

Private sales and making sure you have the right investors onboard

Having raised US$8.7 million in their March ICO, Switcheo Network chose to hold a private sale as they had “a small following from the start”. Feeding off of the buzz surrounding competing product DEXs on NEO like Neon Exchange (NEX) and Aphelion, they consulted with one of the founding partners of NEO Global Capital, Roger Lim, to accelerate their fundraising process. Jack Yeu also highlights the importance of networking within the crypto world,

stating:

The advice and connections [Roger] brought to us proved to be invaluable.

Christel Quek of BOLT shares that of the US$12 million raised in a combination of Ether and NEO, approximately US$9 million was raised through a private contribution round that was completed in 2 months. She also shares that BOLT were very strict in ensuring that they had

strategic investors on board.

We would assess their contribution to our project, including introductions to key partnerships, that they would trade our BOLT Tokens diligently (vs a pump and dump situation).

Community, engagement and transparency

How a project’s team presents itself and interacts with the community is key in ensuring interest, a point that Stephen Hyduchak of Bridge Protocol raises. Through AMAs (Ask Me Anything threads on Reddit) and community influencers, Bridge Protocol aimed to be fully transparent in their project’s progress. As a testament to his team’s commitment to transparency, he tells us of a time in which “the team stayed up throughout the night to make sure users received their NEO back within 48 hours” while their token sale was ongoing. Val Yap of PolicyPal Network adds that Community Managers were key in maintaining interest in their project during

the ICO period.

They share all our projects on Telegram and Twitter, and also frequently engage the community to address any concerns they might have.

For her, Telegram engagement is especially important as it provides a means of instant and direct communication with the community. She boasts that at one point in time, the PolicyPal Network Telegram channel had over 23,000 members actively participating in the discussion.

Use the whitepaper to showcase your project and any working products

The whitepaper is often seen as an integral piece of the ICO pitch, allowing the project team to showcase their vision and the technology behind it. Val Yap tells us that the whitepaper is “important in getting interest from investors during [the] public crowdsale”. Christel Quek goes a step further by telling us that while the whitepaper is a good reflection of what a project has to offer, what it really boils down to is the “delivery of results”. Amid a bearish market, investors have rightly become more cautious when approaching ICOs. What matters most is having a working product and to inform potential investors of

your mission.

What matters is to start from the mission and to articulate it in a narrative that anyone in the market can understand, before going to work on deal-making […] to make the project a wildly successful one.

There’s no need to run a 6-figure ICO

Most ICOs run into high 6-figure sums and in some cases 7-figures. Knowing how much you need to spend, and how to avoid the 6-figure pitfall can go a long way when planning your ICO. For BOLT, the entire ICO (including legal, accounting, operational and technology fees) ran them just under US$500,000, all of which was borne out of the founders’ pockets. Having these funds in place as an investment is key to making sure the ICO is successful.

As Christel puts it,

Good things take time and money, especially if you want the process to be rigorous and done to a high standard.

Mint what you need and keep your Token Economics simple

Token economics refers to the model and implementation of cryptocurrency systems based on blockchain technology. As such, they’re an important part of attracting investors, providing a way to show both speculative and utility value. Stephen Hyduchak shares that Bridge Protocol based their token economics on the needs of their platform, ensuring “Bridge Protocol users wouldn’t need to buy more tokens than needed”. Of the total 1 billion tokens available, 500 million was offered to the public, while the other 500 million was retained by the company to provide incentives to potential partners.

For founders like Jack Yeu, ensuring their token economics were as simple as possible was a means to make sure “[the] project and token was easily understood by the masses”. Having distributed 1 billion Switcheo Tokens (SWTH) during their token sale, SWTH provides a discount on trading fees – operating similarly to the Binance token. It also serves as a trading pair to “potentially facilitate the transfer of value across different blockchains in the future”.

Article Produced By
Eugene Cheng

About the author

Eugene is Partner and Creative Lead at HighSpark – a strategic training and presentation design company that works with Fortune 500 companies and blockchain startups to communicate more powerfully. Eugene writes about blockchain trends, business and marketing for leading publications like Lifehack, Techinasia, e27 and more.

https://bitcoinist.com/4-founders-secrets-successful-icos/

David https://markethive.com/david-ogden