New Jersey issues cease and desist order to two crypto companies

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The New Jersey Bureau of Securities has issued emergency orders to two cryptocurrency firms, demanding that they cease offering unregistered securities in the state. In a press release yesterday, the bureau accused the two of violating the state’s securities laws, making misleading statements and withholding pertinent information from investors.

The cease and desist orders are against Zoptax LLC and Unocall. The bureau accuses Zoptax of conducting an unregistered sale of securities through its initial coin offering (ICO). The ICO has a $500,000 soft cap and a $3.4 million hard cap. The bureau further accuses the firm of “making materially false and misleading statements and/or omitting to state material facts in connection with the offer and sale of its securities, including how the funds raised in the ICO will be used, information relating to the persons or entities that developed Zoptax, and its physical address and principal place of business.”

The bureau also accused Unocall of an unregistered ICO. Unocall is alleged to offer tokens to raise capital to build an ecosystem that will offer a token trading platform. The Unocall website is also alleged to offer potential investors the opportunity to earn a guaranteed interest of 0.18%-0.88% per day. Unocall also purportedly made “materially false and misleading statements and/or omitting to state material facts in connection with the offer and sale of its securities.”

New Jersey’s Attorney General Gurbir Grewal commented, “Today’s action demonstrates that our 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.”

The bureau’s chief Christopher Gerold reiterated the AG’s views, reminding investors that investing in cryptos was risky.

“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,” he stated, adding, “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 has continued to crack down on crypto businesses as part of Operation Cryptosweep. The operation is led by the North American Securities Administrators Association and seeks to sniff out unlawful crypto businesses. Last month, the bureau filed a case against Pocketinns, a blockchain company operating in the state for violation of securities laws.