The Colorado Department of Regulatory Agencies is investigating the actions of two companies accused of promoting illegal initial coin offerings (ICOs) to residents of the state. According to the region’s securities commissioner, Linda Healthcare Corp. (based in California) and Broad Investments LLC (based in Washington) may be in violation of securities laws pertaining to initial coin offerings.
Linda Healthcare is accused of promoting a currency listed as the Linda Health Coin, which could reportedly be used to buy health insurance with the company. This would grant access to its telemedicine offerings: an artificial intelligence chat service that provides medical solutions through the medium of blockchain technology.
The issue with this is that Linda Healthcare’s website fails to either provide potential buyers with an insight into the risks associated with investing in cryptocurrency, or to inform them that the initial coin offering in question constitutes a security in the state of Colorado.
Broad Investments has also invited the regulatory body’s ire. Alleged to have been promoting crypto through a token on their website, which they describe as “an equity coin that represents shares of the company, like company stocks”, they have also found themselves faced with the possibility of sanctions.
Colorado Securities Commissioner Gerald Rome stated that: “Investment opportunities being sold through ICOs over the internet need to be approached with the same level of caution as any highly risky investment venture." He added:
“Most ICOs meet the terms of a securities transaction and carry with them all of the same risks when it comes to losing money. If you are investing money in any kind of cryptocurrency such as a coin or token where you are expecting to reap returns and are relying on those returns to come from the efforts of an outside party, you are dealing with investments.”
Per his words, “ICOs are highly risky,” and only sophisticated investors who understand they can lose whatever they invest should put their money in them. Both Linda Healthcare and Broad Investments must now prove that the issuing of sanctions would be unfair as per the Colorado Securities Act if they want to avoid them.