Offering or Sale of Unregistered Securities
This is another class action about shady business practices related to cryptocurrencies, this time Siacoin and Decred. Most of the complaint covers broken promises about mining equipment, but the legal allegations center on the charge of the sale of unregistered securities.
This class action concerns yet another initial coin offering (ICO), this time for a cryptocurrency called the Cloud token, sold by Cloud With Me Ltd. The complaint claims that the ICO was actually the sale of unregistered securities, in violation of the Securities Act of 1933.
It’s a wonder that buyers still exist for new cryptocurrrencies that show no signs of any serious underpinnings to support their claims. The complaint for this class action alleges that BitConnect coins are unregistered securities, a fraud, and a Ponzi scheme. Income from BitConnect coins is purportedly obtained through up to 40% interest per month, an additional daily rate of interest, profits generated by “volatility software,” and a commission on purchases made by referrals. The complaint alleges that BitConnect coins are unregistered securities, sold in violation of the Securities Act of 1933, and that the defendants have engaged in common fraud as well as fraud in the purchase or sale of securities in violation of the Securities Exchange Act of 1934.
What does an initial coin offering (ICO) for a cryptocurrency have to do with “pulling the cannabis community from marginalized to mainstream”? The complaint for this class action attempts to explain, but in the end the allegation is the sale of unregistered securities, violating Sections 12(a)(1) and 15(a) of the Securities Act of 1933.
SEC Chairman Jay Clayton has described initial coin offerings (ICOs) for cryptocurrencies as “fertile ground for fraud on investors” and it appears that some investors are belatedly awakening to the value of securities regulations. The complaint for this class action alleges that during its ICO, for each investment, Giga Watt said it would provide either (1) Giga Watt tokens that would give the investor the right to use the Giga Watt Project’s capacity for fifty years, or (2) mining equipment and power supplies, to be set up and hosted by the Project. However, investors would not be given these things until a specific batch of tokens or machinery was released. Many investors are now questioning whether they will ever see their tokens or equipment. The complaint contends that the ICO was an offering and sale of unregistered securities, in violation of the Securities Act of 1933.
The complaint for this class action says, early on, that many of its statements are unnecessary: It claims that ATBCoin, LLC’s initial coin offering (ICO) was an offering and sale of unregistered securities, which is illegal regardless of whether investors were defrauded. Still, it adds a number of allegations of deception “to stress the urgency and need for immediate judicial intervention…” In fact, even the defendants spoke of their coins as investments and referred to their buyers as investors. The complaint claims that the ICO was a violation of the 1933 Securities Act.
At issue in this class action are nearly $4 million worth of investments the plaintiffs believed they were making into a new cryptocurrency from Monkey Capital prior to its initial coin offering (ICO). The investments were made primarily in bitcoins. The complaint contends that cryptocurrencies are actually unregistered securities and asks for relief from Monkey Capital’s alleged wrongdoing on that basis. According to the complaint, no ICO took place, and Monkey’s fundraising website disappeared. The complaint claims that cryptocurrencies are securities and that Monkey’s actions were an unregistered offer and sale of securities and fraud, among other things, in violation of the Securities Act of 1933 and Florida state laws.