The U.S. Securities and Exchange Commission (SEC) has taken motion towards an oil and gasoline exploration firm and its founder who “perpetrated a fraudulent initial coin offering (ICO) to fund oil exploration and drilling in California.” The token sale failed to lift cash however the tokens had been issued as half of a bounty program, which the SEC considers securities.
SEC Took Action
The SEC introduced Tuesday that it has taken motion towards David Thompson Laurance and the oil and gasoline exploration firm he based, Tomahawk Exploration LLC. Laurance tried to lift cash by issuing digital tokens, tomahawkcoins (TOM).
Founded by Laurance in 2010, Tomahawk “engaged in an offering of Tomahawk securities that constituted penny stock,” the SEC described. The 76-year-old California resident is the only managing member of Tomahawk.
“The SEC’s order finds that Tomahawk and Laurance violated the registration and antifraud provisions of the federal securities laws,” the Commission detailed, including:
Without admitting or denying the SEC’s findings, Tomahawk and Laurance consented to a stop and desist order and Laurance consented to an officer and director bar, penny inventory bar, and a $30,000 penalty.
The SEC has obtained a everlasting officer and director bar towards Laurance which prevents him from serving as an officer or a director of any SEC-reporting firm.
The penny inventory bar prohibits him from proudly owning a penny inventory in his personal account in addition to engaged in any actions associated to an providing of a penny inventory together with performing as a promoter, finder, guide, agent, dealer, supplier, or issuer.
The Founder and his Company
According to the SEC, Laurance “perpetrated a fraudulent initial coin offering (ICO) to fund oil exploration and drilling in California.”
He used “inflated projections of oil production that were contradicted by the company’s own internal analysis” in his promotional supplies. In addition, he “misleadingly suggested that Tomahawk possessed leases for drilling sites when it did not,” the Commission clarified.
Tomahawk’s promo supplies described Laurance as having a “flawless background,” omitting details about his prior prison conviction for his function in fraudulent securities choices. “Tomahawk also claimed that token owners would be able to convert the tomahawkcoins into equity and potentially profit from the anticipated oil production and secondary trading of the tokens,” the SEC detailed.
Robert A. Cohen, Chief of the SEC’s Cyber Unit, warned:
Investors must be alert to the chance of old-school frauds, like oil and gasoline schemes, masquerading as progressive blockchain-based ICOs.
No Money Raised however Bounty Tokens are Securities
Tomahawk initially needed to lift $5 million by way of the ICO after failing to lift funds by way of personal investments and public capital markets.
The firm, nevertheless, “failed to raise money through the ICO…[but] issued approximately 80,000 TOM as part of a ‘bounty program’ in exchange for online promotional and marketing services,” the SEC famous. Based on the info and circumstances of the case, “TOM tokens are securities because they are investment contracts…and because they represent a transferable share or option on a security,” the Commission elaborated:
Tomahawk’s issuance of tokens below the bounty program constituted a proposal and sale of securities as a result of the corporate offered TOM to traders in alternate for services designed to advance Tomahawk’s financial pursuits and foster a buying and selling marketplace for its securities.
The SEC concluded that Tomahawk and Laurance violated the Securities Act by “offering and selling TOM without having a registration statement filed or in effect with the Commission or qualifying for an exemption from registration with the Commission.”
What do you suppose of the SEC’s motion towards Tomahawk and its founder? Let us know within the comments part below.
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