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Nilam Another Pump and Dump? Mining Company Backtracks on Plan to Buy 24,800 BTC 

Last Updated April 29, 2024 4:15 PM
Shraddha Sharma
Last Updated April 29, 2024 4:15 PM

Key Takeaways

  • Nilam Resources will not be proceeding with the initial agreement to acquire 24,800 BTC.
  • The penny stock was under fire after former CEO Ron McIntyre resigned citing a “pump and dump” strategy.
  • Nilam Resources has announced a new strategy to back NILA token with Bitcoin.

Nilam Resources is once again in the news for ‘pump and dump’ allegations after the SPV MindWave Ltd. called off an initial partnership with the mining company. The partnership laid down an acquisition strategy for 24,800 Bitcoin.

The penny stock has now shifted its strategy towards launching the NILA token backed by BTC.

Nilam’s ‘Pump and Dump’ Allegations

Nilam Resources will not be acquiring Bitcoin, as per a press release  by Special Purpose Entity MindWave Ltd. The SPE has terminated the Letter of Intent (LOI) that laid down a strategy to acquire 24,800 BTC with the mining company. 

In March, Nilam introduced MindWave as a special purpose entity to hold 24,800 Bitcoin and potentially other digital assets. Nilam Resources planned to acquire 100% of MindWave’s capital stock, making it a fully owned subsidiary. In exchange for these digital assets, Nilam was to issue a new class of Preferred Series C Stock to the shareholders of MindWave.

The latest press release abolishes the arrangement.

According to TradingView , the gold mining NILA stock dipped 95% in one month and 20% of the fall came in one day on the back of the announcement.

NILA 'Pump and dump' | Source: TradingView
NILA ‘Pump and dump’ | Source: TradingView

The statement cited strategic misalignments and compliance challenges in the US as primary reasons. Meanwhile, Nilam has launched the NILA Benefit Rights Token (BRT) with MindWave. While the token claims to redefine value creation in the digital asset space by offering token holders governance rights and access to exclusive features and strategic initiatives, there are problems.

The Problems With NILA Token

The NILA token has been launched as a utility and governance instrument. It claims to reward investors for active participation in the MindWave ecosystem. NILA tokens are reportedly backed by 24,800 BTC and are held by MindWave. As the token opens for a private sale, its legality is in question.

Post via X/H.E. Cas Piancey

As per a lawyer cited  by Protos, the NILA token likely violates existing financial and securities regulations. The concerns raised likely stem from how the token is classified and the promises made to potential buyers. Whether a token is considered a “utility token” or a security can significantly affect its legality under various jurisdictions, as per the report.

The NILA token could reportedly be seen as having characteristics of a security, potentially exposing it to the risk of legal action and regulatory penalties.

CCN previously reported that the former CEO Ron McIntyre resigned, accusing Nilam of engaging in a “pump and dump” scheme following their announcement to acquire 24,800 Bitcoins in collaboration with Xyberdata Ltd.

The announcement had dramatically inflated Nilam’s stock price by about 1,900%, leading to market manipulation allegations.

Nilam announcing the plan without much financial due diligence could also hint at possible regulatory scrutiny and an investigation by FINRA.

CCN reached out to Nilam Resources COO Pranjali More who did not immediately respond to a request for comment.

Cautious Approach After Backtracking BTC Strategy

The press release by Nilam Resources suggests strategic backtracking and lingering legal concerns. The reason for aborting the plan to acquire 24,800 BTC due to compliance challenges raises due diligence questions before the announcement.

 Nilam has pivoted to backing the NILA token but has not escaped scrutiny about its alleged “pump and dump” strategy.

 The token’s structure and promises have also raised legal questions, emphasizing its shaky standing with financial regulations. The switch to the NILA token appears to be another high-stakes gamble. Especially when Nilam saw its stock prices soar and plummet dramatically following the revelations.

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