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New Jersey regulator stops two ICOs for fraudulent securities, as 'Operation Cryptosweep' continues

Brian Turner [CC BY 2.0 (https://creativecommons.org/licenses/by/2.0)]

Thu, 08 Aug 2019, 05:46 am UTC

New Jersey’s Bureau of Securities has issued two emergency orders to Zoptax and Unocall to stop their initial coin offerings (ICO), as a part of its “Operation Cryptosweep” initiative.

In the cease and desist orders, the Office of the Attorney General in New Jersey alleged that both companies were offering fraudulent securities. Zoptax was seeking between $500,000 and $3.4 million for its Zoptax Coins, whereas Unocall was issuing tokens and investments in its staking protocol with a daily interest returns of 0.18% to 0.88%.

The two actions today are a reminder to investors that investing in cryptocurrencies or crypto-related products have significant risks and investors must do their diligence before investing,” New Jersey Attorney General Gurbir S. Grewal said.

Moreover, the Bureau claims that Zoptax made “materially false and misleading statements and/or omitting to state material facts in connection with the offer and sale of its securities.” These purportedly include the distribution of ICO funds, relevant information on the entities behind the firm, and pertinent details of the company’s location such as its physical address and principal business place.

Unocall also reportedly misled potential investors in the same way. The company is offering a website-conducted IPO with an aim to secure funds for the development of its ecosystem that will enable trading for its native tokens, altcoins, and fiat money via its UnoPay Mobile Wallet.

Noting that the market rules are applicable to all businesses, Grewal reminded that the “Bureau of Securities stand ready to enforce our investor protection laws in cases involving initial coin offerings and cryptocurrency-related investment schemes. As innovation in the online cryptocurrency-related investment market continues, market players need to understand that the rules still apply to them.

Both American and Canadian regulators are part of the sweep, which is being coordinated by the North American Securities Administrators Association (NASAA). In April 2018, NASAA organized a task force to conduct investigations on ICOs and other cryptocurrency-related products.

Meanwhile, in Malaysia, the country’s Securities Commission has issued an advisory warning to the public cautioning them against any new ICOs or digital assets exchange. Pending the release of the new guidelines on offers, no new ones coming out have been given authorization.

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