New Jersey Issues Stop Order on Two “Fraudulent” ICOs

New Jersey’s Bureau of Securities has revealed enforcement action against two state-based initial coin offerings.

On August 8, Canadian and American regulators coordinated under the North American Securities Administrators Association (NASAA) and facilitated by New Jersey authorities have issued emergency orders against Zoptax and UNOcall, two NJ-based ICOs.

Part of “Operation Cryptosweep,” the Bureau of Securities charges both ICOs were advertising false securities offerings. Zoptax was looking between $500,000 and $3.4 million for its Zoptax Coins while UNOcall was issuing tokens and investments in its staking protocol, which claimed daily interest returns between 0.18% – 0.88%.

New Jersey’s Attorney General’s Office says the purpose of the investments, nature of issuance, and misleading consumer data was behind the decision. A full halt on issuance was mandated.

New Jersey Attorney General Gurbir S. Grewal said in a statement that market rules apply to all businesses, notwithstanding the medium they exist on:

“[The] Bureau of Securities stands 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.”

Since January of this year, Operation Cryptosweep has 330 inquiries or investigations, 85 pending or completed cases, and eight enforcement actions, including Zoptax and UNOcall.

Initial coin offerings have come into increased scrutiny after a 2017 market breakout and consequent 2018 drop. Bigger regulatory bodies such as CFTC and SEC have recently gone after ICOs as well. ICO Kik published a 130-page outline answer against the SEC’s recent enforcement action against it earlier this week.