North Dakota Securities Watchdog Issues Cease-and-Desist Order Against Fraudulent Russian ICO

The North Dakota Securities Department has issued a cease-and-desist order against an initial coin offering (ICO) in Russia purportedly impersonating Liechtenstein-based Union Bank AG to advertise potentially fraudulent securities.

As North Dakota Securities Department commissioner Karen Tyler said in an official statement released November 19, the fraudulent ICO project dubbed Union Bank Payment Coin (UBPC) purportedly created a website that imitates certain elements of the Union Bank’s website interface, including its images, terms, style, as well as leadership information.

To lend credibility to the fraudulent offering, UBPC touted the project as the “world’s first security token backed by a fully licensed bank” that offers a “stable coin that is fully backed by a fiat currency – the Swiss franc,” in an effort to hoodwink potential investors. According to Tyler, the website’s claims were based off a legitimate announcement previously published in August by Union Bank AG.

As further detailed in the statement, while Union Bank’s website IP address is located in Liechtenstein, UBPC’s is registered to an individual in Russia.

As Union Bank AG was quoted as stating in an email:

“Union Bank AG is, of course, not the subject of this Cease and Desist Order. Please be aware of potential scammers. The only way to participate in Union Bank AG’s coin offerings is via a direct contact with the bank. There are no websites for contributions or sign-ups, and no wallet addresses are available publicly or privately to send coins or fiat money.”

Tyler went on explaining:

“Because ICOs are sold over the internet and pitched heavily through social media platforms, North Dakotans can be exposed to the offers whether the promoter is down the street or on the other side of the globe. Financial criminals continue to cash in on the hype and excitement around blockchain, crypto assets, and ICOs – investors should be exceedingly cautious when considering a related investment.”

This would not be the first time the securities regulator has halted crypto startups promoting fraudulent crowdfunding projects in the state. In October, it also issued a cease and desist order against a number of other similar firms, including Life Cross Coin, Advertiza Holdings, and Crystal Token.