NJ orders three online cryptocurrency promoters to stop offering unregistered securities in the state

State officials issued emergency orders today to stop three online cryptocurrency-related investment entities from fraudulently offering unregistered securities in New Jersey.

Cease and desist orders were issued to the Bullcoin Foundation (also known as Bullcoin Gold), Trident (also known as the Trident Crypto Index Fund) and Springcryptoinvest as part of “operation cryptosweep,” an international crackdown on fraudulent initial coin offerings and crypto currency-related investment products.

More than 40 other state securities regulators in the United States and Canada are participating in the sweep, which is being coordinated by the North American Securities Administrators Association, officials said. Operation Cryptosweep has resulted in nearly 70 investigations and 35 completed or pending enforcement actions since the beginning of May.

The New Jersey Bureau of Securities discovered that Bullcoin is offering investors an unregistered security in the form of an initial coin offering of its Bullcoin Gold cryptocurrency, the “BCG token”, through its website and through various social media websites. The Bullcoin securities were not registered with the bureau to be sold in New Jersey. Officials said Bullcoin further violated the law by failing to disclose key facts to prospective investors, including its assets and liabilities, or financial information about the business; the risks associated with the BCG tokens; and the cryptocurrencies that the Bullcoin fund would invest in. Officials also found that Bullcoin made untrue statements on its website, including that it is “the leading crypto-hedge fund,” an assertion that is unsupported.

The Bureau found that Trident is offering investors an unregistered security in the form of an initial coin offering of its Trident coins, “TDC Coin”, through its website and through various social media websites. The TDC coins were not registered with the bureau to be sold in New Jersey. Trident further violated the law by failing to disclose key facts to prospective investors, including the identity of its principals; its physical address and principal place of business; its assets and liabilities, or financial information about the business; the persons or entities that developed the TDC coins; and the persons or entities that are buying and selling the cryptocurrency in the Trident Crypto Index Fund. Officials also determined that Trident made untrue statements of material facts, including a statement on its website that in 2017 the Trident Crypto Index Fund had a return of more than 1400 percent. Officials said there is no evidence provided of these returns. A statement on its white paper claims that since the beginning of 2016, TDC coin has “gained by a factor of 154” but officials said the Trident website indicates that Trident was not founded until 2017.

The Bureau found that Springcryptoinvest is offering investors an unregistered security in the form of various investment packages through its website and through various social media websites. In order to invest with Springcryptoinvest, investors must open an online account through its website. After opening an account, investors are urged to fund the account by purchasing a plan using the cryptocurrencies Bitcoin, Litcoin, or payment websites PerfectMoney or Payeer. The Springcryptoinvest investment packages were not registered with the bureau to be sold in New Jersey. Officials said Springcryptoinvest further violated the law by failing to disclose key facts to prospective investors, including the identity of its principals; Springcryptoinvest’s assets and liabilities, and other financial information; and how investor funds are invested. Officials also found that Springcryptoinvest made untrue statements of material facts on its website by claiming it was incorporated in the United Kingdom in November 2002 with 04588340 as its registration number. United Kingdom registration number 04588340 is not assigned to Springcryptoinvest, and there is no United Kingdom registration number for the name Springcryptoinvest.

“Not every initial coin offering or cryptocurrency-related investment is fraudulent, but the risk of fraud is significant,” said Christopher Gerold, chief of the New Jersey Bureau of Securities. “Since cryptocurrencies began attracting headlines last year, we have been warning investors to approach crypto-related investments with extreme caution and stay away from any investment that requires them to transmit funds to an unidentified online entity that fails to disclose who is behind its investment products, the financial status of its business, and the physical location of its operations.”