U.S Securities Hits 3 ICOs with Cease-and-Desists
The Alabama Securities Commission (ASC), the U.S. state’s securities regulator, has joined its counterparts in Texas and New Jersey in hitting out at initial three coin offerings (ICOs) that are soliciting local residents.
According to a cease-and-desist order entered on the begging of May and revealed yesterday, the agency has ordered cryptocurrency mining firm Extrabit to cease its token sale offering in the state.
The ASC alleged the firm has been illegally soliciting Alabama investors with what it considers an unregistered securities offering after it advertised its token sale.
While currently the online ad appears to have been taken down, the agency said in the order that the firm originally claimed that investors in the pre-ICO phase could purchase Extrabit’s token “EXB” at half price.
“To participate in the pre-sale, the user must invest 20,000 USD and after the purchase, the tokens will be sent to MyEtherWallet within 48 hours,” the agency quoted the original ad as saying.
Also, Extrabit’s white paper claims that, since the firm generates its profits mainly from mining bitcoin, zcash and monero, it promises a 185 % return on investment every quarter for investors who maintain a positive balance in their EXB wallet.
And Extrabit seems not to be the only ICO that is targeting residents in Alabama. A Google search for “token sale” on the WSFA website currently comes up with over 200 press release-style ads from various ICO projects.
Like with Extrabit, the agency accused the 2 projects of selling unregistered securities in Alabama while making unrealistic promises to potential investors over the likely returns on investment, which it could turn into pyramid scheme.