North Dakota regulators ban Russian startup

North Dakota financial regulators have banned a fraudulent Russian cryptocurrency company from operating in the state after it was revealed the company was posing as a bank in Liechtenstein to illegally launch an initial coin offering (ICO).

In a statement released Monday, securities committee chair Karen Tyler explained that scammers pretended to be Union Bank AG and used its reputation to issue and sell counterfeit cryptocurrency, allegedly on behalf of the bank. 

This ICO is an attempt to fraudulently obtain funds from investors by convincing them that the coins are being sold by Union Bank AG, a licensed and regulated bank located in Liechtenstein. Several elements of the USPC website are directly copied from the Union Bank AG website, including stylized elements, phrases, management information and photographs.

USPC marketing materials offer "lucrative Swiss Franc-backed stable tokens." This allowed scammers to trick investors into believing that their fake USPC cryptocurrency would be "the world's first security token backed by a fully licensed bank." Authorities checked the project's website and discovered that the fake USPC website used a Russian IP address, while the bank's real website had a Liechtenstein IP address. 

Cases of such fraud have become more frequent recently, and the number of cryptocurrency-related lawsuits has tripled since 2017, with 45 lawsuits filed in the first six months of this year. The U.S. Securities and Exchange Commission (SEC) initiates approximately 30 percent of these lawsuits, and that's just the beginning.

Last week, the SEC fined two cryptocurrency startups, $250,000 each, for operating in unregistered security tokens. Decentralized trading platform EtherDelta was also forced to close due to a $300,000 fine for trading securities without a license.

According to thenextweb.com