State financial regulators have ordered a California company to stop marketing its cryptocurrency in Vermont.
LevelNet, of Irvine, Ca., is selling tokens -- known as an initial coin offering -- through its website and on the internet to raise money for an antivirus platform.
According to an affadavit filed in the case, LevelNet told potential investors that the company is worth as much as $1 billion and a return on investment of more than 2,000 percent is possible within five years.
LevelNet describes itself as "a revolutionary peer to peer cyber protection network." Its YouTube page includes videos on its business model, most of which feature Paul Shkliaev, the company's fopunder and CEO.
An investigation by the Vermont Department of Financial Regulation found that LevelNet's ads promise "unfounded and unrealistic investment returns." It has ordered the company to "cease and desist" offering or selling the coins -- which regulators say are unregistered securities -- in Vermont.
Cryptocurrencies are a medium of exchange created and stored electronically in the blockchain, a public database that records digital transactions. Bitcoin, Ethereum and Litecoin are other examples of cryptocurrencies.
Regulators across the country have warned investors that cryptocurrencies involve a “high risk of fraud.”
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