Taking part in an international crackdown on fraudulent initial coin offerings, Maryland Attorney General Brian E. Frosh’s office issued a cease-and-desist order against a firm operating out of an apartment in Windsor Mill.
The securities division of the attorney general’s office issued the order Monday against Browsers Lab LLC, located in a unit in The Reserve at Stonegate apartments. The company, which has the right to a hearing before the order becomes final, could not be reached for comment.
Initial coin offerings use crowdfunding and cryptocurrencies to raise capital. They can allow startups to avoid regulated ways of raising capital through venture capitalists and banks.
“Fraudulent activity involving ICOs and cryptocurrency-related investment products is a significant threat to investors in Maryland,” Froah said in a statement. “The Securities Division is committed to swiftly and effectively protecting investors from schemes and scams involving these products.”
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The attorney general’s office said Browsers Lab used its website to pitch the sale of tokens that would be used to create a new market. Funds raised would cover operating expenses and give investors the opportunity to buy in at a discount before the initial coin offereing.
The order was part of “Operation Cryptosweep,” a joint effort between more than 40 other state and provincial securities regulators in the United States and Canada to coordinate investigations of such offerings. The sweep resulted in 35 pending or completed enforcement actions since April.
Raising awareness of the risks associated with coin offerings and cryptocurrency-related investments is one goal of the sweep.
“Not every ICO or cryptocurrency-related investment is fraudulent, but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution,” Frosh said.
The agency also has issued two investor advisories: “What to Know About ICOs” and “Be Cautious of the Crypto Investment Craze.” Both are available on the agency’s website.