On August 7th, the New Jersey Bureau of Securities (The Bureau) issued multiple ‘Cease and Desist’ orders, on behalf of themselves and the North American Securities Administrators Association (NASAA).
These actions took place as part of an effort dubbed by the regulatory bodies as ‘Operation Cryptosweep’. The companies which were on the receiving end of these orders were a pairing of New Jersey based outfits – Zoptax and UNOcall.
The pairing are accused of issuing fraudulent digital securities under the guise of utility tokens through an ICO.
This company indicated that they utilize a decentralized network to facilitate private voice-over-internet-protocol (VOIP) calls.
Their accompanying ICO was originally expected to raise upwards of $3.4 million USD. The Bureau indicates that, not only do the tokens meet the framework of a security, but they were not registered with authorities. Furthermore, the company was found to make various misleading statements on their website.
CEO and Founder, Rao Naveed, oversees company operations.
UNOcall touts their product as a ‘secure coin and payment platform’, based on blockchain technologies.
Much like Zoptax, UNOcall was found to be displaying misleading statements on their site, containing guarantees on investment returns. This ICO and accompanying tokens were also not registered with authorities.
Founder, Oggan Sarfuddin, oversees company operations.
Upon announcing the distribution of multiple cease and desist orders, Acting Director of the Division of Consumer Affairs of the New Jersey Bureau of Securities, Paul R. Rodriguez, took the opportunity to warn investors. He stated,
“The Bureau’s actions today, and the actions taken by other securities regulators during ‘Operation Cryptosweep,’ are a reminder to investors that while not every initial coin offering or cryptocurrency-related investment is fraudulent, there are significant risks involved with these products…Investors must be on alert and not be tempted to invest in cryptocurrency-related investments without first vigorously vetting any transaction.”
Bureau Chief, Christopher Gerold, elaborated on his colleagues statement, stating,
“With the price of Bitcoin increasing over the last few months and the announcement of Facebook’s Libra, there has been a sharp increase in public solicitations to invest in crypto-related products that appear on their face to be suspect…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 Bureau of Securities
This regulatory body operates out of the state of New Jersey, and is tasked with ensuring fair and transparent business practices. They achieve this through the enforcement of various regulations, applicable to investment vehicles such as digital assets.
Bureau Chief, Christopher Gerold, who also resides as the President of the NASAA, recently announced the release of an educational video. This video discusses commonly used tactics by fraudulent companies, such as those discussed here today. Check out the video HERE.
Those that follow the world of blockchain will note that these companies are not the first to be accused of fraud, and to receive cease and desists orders. Since the world of blockchain and cryptocurrencies really began to boom, in 2017, there have been various examples of this. The following are a few of the more recent companies to face the wrath of regulatory bodies due to their ICOs.