The Colorado Division of Securities has filed cessation orders against four Initial Coin Offerings (ICOs) allegedly involved in fraudulent and illicit practices, according to an official announcement Nov. 20.

Colorado Securities Commissioner Gerald Rome issued the new cease and desist orders following investigations by the Division’s ICO Task Force. Rome has issued 18 cessation orders to ICO projects offering unregistered securities since May, 2018. According to the announcement, at least two more orders are still pending.

The recent orders affected four crypto and blockchain-related firms; Global Pay Net, Credits LLC, CrowdShare Mining, and CyberSmart Coin Invest. All the companies were reportedly accessible to Colorado residents and allegedly violated securities laws.

Regulators state that the projects also engaged in fraudulent marketing practices; Global Pay Net allegedly falsely claimed that “investors receive 80 percent of the company’s profits.” CrowdShare Mining promised an “at least 1,000 percent” four-year return on investment for investors who bought its token.

Commissioner Rome stated that the “sheer number” of cease and desist orders against ICOs should be a “red flag [...] that there is a real risk that the ICO you are considering is a fraud.” Rome also highlighted the problem of crypto investor protection, claiming that fraudsters “simply create a fake ICO to steal investors’ money,” and “trick investors into wrongfully paying them.”

Earlier this month, the securities regulator issued cease and desist orders to four ICOs for allegedly offering unregistered securities.

On Nov. 19, Italian securities regulator Commissione Nazionale per le Società e la Borsa (CONSOB) issued enforcement actions against three crypto-related firms for alleged violation of local financial laws by failing to register as financial intermediaries.

That same day, the North Dakota Securities Commissioner issued a cease and desist order against an alleged Russia-based ICO that posed as Liechtenstein Union Bank.

According to a recent study by the University of British Columbia, ICOs face a “compliance trilemma” that limits their potential. Some issuers shirk compliance measures in order to “reach a distributed pool of investors” and have an offering that is “cost-effective.”

The study explains, “If issuers forgo these costs, the risk of being non-compliant rises significantly. The result is a trilemma, whereby issuers currently must forgo one of these goals to realize the other two, or to compromise on all three.”