The U.S. Securities and Exchange Commission (SEC) has issued an officer and director bar, a penny stock bar, and a penalty of $30,000 to a fraudulent ICO founder today.
According to the official press release, David T. Laurance was previously found guilty for taking part in deceitful security offerings.
Laurance’s LinkedIn profile shows that he is the president and CEO of oil drilling company Tomahawk Exploration LLC. He has worked at the company for over eight years. Laurence created “Tomahawkcoins” in June 2017 with a plan to raise $5 million in an initial coin offering (ICO). The project would then, he advertised, use the capital to drill ten wells in California.
Join CCN for $9.99 per month and get an ad-free version of CCN including discounts for future events and services. Support our journalists today. Click here to sign up.
However, the SEC claims that the ICO provided false information in their promotional statements. They “used inflated projections of oil production” and claimed that Tomahawk had already obtained leases for drilling on the sites. The firm also tried to portray Laurance as a principled individual by claiming that he had a “flawless background”.
The ICO wasn’t successful in raising enough money; however, the company set up a bounty program to trade Tomahawkcoins with online promotional services.
Robert A. Cohen, chief of the SEC’s Cyber Unit, said, “Investors should be alert to the risk of old-school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs.”
Both Laurance and Tomahawk were given cease and desist orders — they chose to avoid denying or accepting the claims. Furthermore, Laurance was permanently banned from working as an officer and a director under the officer and director bar, and from trading or owning stocks under the penny stock bar.
According to a recent study published by digital asset newsletter Diar, exit ICO scams have cost investors over $100 million. The highest position is held by Shenzhen Puyin Blockchain Group, a Chinese company, which was able to acquire $60 million from three different ICOs.
Following the recent developments, SEC published a warning for crypto investors today. The agency admonished investors to research the background of any individual who is selling cryptocurrencies.
The SEC also added that scammers often lure people into their projects by offering high returns on their investment. In order to combat this issue, the agency has created a search tool at Investor.gov which contains the details of various investment professionals. Another tool, SEC Action Lookup – Individuals (SALI), helps investors identify individuals who have been convicted by the SEC.
Featured Image from Shutterstock