The Vermont Department of Financial Regulation (DFR) has issued a cease-and-desist order to California-based cryptocurrency firm LevelNet against an ongoing initial coin offering (ICO) that 'violates' the Vermont Uniform Securities Act.
LevelNet is setting an ICO to raise money from investors across the country in exchange of their newly created LVL token.
According to its website, LevelNet is developing a "decentralized antivirus platform" to be shared by investors who buy the LVL token.
LevelNet has now been ordered by the regulator to immediately stop advertising and selling the token to investors in Vermont.
Vermont's financial regulator has determined that LevelNet is violating Vermont law by deceptively advertising unfounded and unrealistic investment returns and failing to properly register the investment.
"The rapid rise of Bitcoin has made Main Street investors aware and interested in cryptocurrencies and ICOs," said DFR Commissioner Michael Pieciak "although many are legitimate offerings that are fully compliant with law - many are not - and this order serves as a good reminder to exercise caution when considering investing in these products."
In late January, the state regulator had issued an investor alert warning Vermonters to be cautious about investments involving cryptocurrencies as they promise exaggerated profits and that many fraudulent investment schemes involve unlicensed individuals or unregistered investments.
The crackdown dubbed "Operation Cryptosweep" is conducted in coordination with the North American Securities Administrators Association (NASAA), with 40 jurisdictions participating from the U.S. and Canada.
It has already resulted in nearly 70 inquiries and investigations and 35 pending or completed enforcement actions.
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