Blockchain startup ATBCoin was hit with a class-action lawsuit, making it the latest in a string of projects to be sued by investors following initial coin offerings (ICOs).
ATBCoin Hit With Class-Action Lawsuit
Filed on Dec. 21 in the Southern District of New York, the lawsuit (PDF) alleges that ATBCoin and its operators violated the Securities Act by conducting a securities offering without registering with the U.S. Securities and Exchange Commission (SEC).
From the suit:
“The ATB ICO was a clear offer and sale of securities because, inter alia, Defendants touted, and Plaintiff and other ATB ICO investors reasonably expected, that the ATB Coins received in exchange for their investments would be worth more than the ETH, BTC, LTC, or other currencies invested. Additionally, as discussed herein, Defendants have explicitly referred to the ATB ICO participants as “investors” and repeatedly stressed the profit potential from holding ATB Coins,” the suit said.
Interestingly, the suit also claims that Herbert Hoover — one of ATBCoin’s co-founders — deceptively claimed that he is a descendant of both U.S. President Herbert Clark Hoover and the Hoover family that founded the Hoover Company.
“These claims are impossible as these two family trees are unrelated. Moreover, as is evident in a video of Defendant Hoover clearly reading his own “biography” with an accent, it appears highly unlikely that Defendant Hoover is who he claims to be,” the suit said.
Apparently, the developers saw the suit coming. Just three days before the suit was filed, ATBCoin published a statement on their blog claiming that it did not accept investment funds from American citizens.
“We want to remind you that from the very beginning of the project, ATB Coin never accepted investment funds from American citizens. All users of the platform accepted the terms and conditions of our Offer and agreed with the point that they are not residents of the United States. This condition has always been and is mandatory when registering at atbcoin.com,” the post said.
ATBCoin also said that it does not conduct financial activities in the U.S., although its website lists its main address as a co-working space located in the Trump Tower in New York City.
ICO Investors Face Regret, Declining Coin Values
According to an estimate from ICO tracker CoinSchedule, the ATBCoin token sale raised $20.4 million worth of bitcoin, ether, and litecoin during its ICO, which ran from June through September.
However, to the chagrin of investors, the value of ATBCoin price has plunged from a high of $1.52 shortly after the ICO to less than $0.48 at the time of writing, even as the values of the coins used to contribute to the ICO have surged.
Consequently, as was the case with Tezos, investors have begun to regret contributing to the ICO and have sought to recoup their funds by having a court rule that the crowdsale violated SEC regulations. So far, no court has ruled on these lawsuits, although SEC Chairman Jay Clayton has stated that most ICOs he has observed should be registered as securities offerings.
Write to Josiah Wilmoth at josiah.wilmoth(at)cryptocoinsnews.com.Follow us on Telegram.