HAVE YOU BEEN DEFRAUDED BY A COMPANIES ICO?

The most common securities law violations that the SEC warns about with ICOs and digital currencies are:

 

  • Theft and misuse of investor funds;
  • A failure to register the coins/tokens as securities
  • Market manipulation, such as pump-and-dump schemes;
  • A failure to maintain adequate internal controls; and
  • A failure to disclose risks associated with these investments.

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If you think you might have invested in a fraudulent ICO or if you have otherwise suffered from the operation of a wrong player in cryptocurrency contact us.

How do ICO Scammers work? 

Fraud and scams are very common even in the most well-regulated stock markets. Due to its non-regulated existence, the anonymous cryptocurrency world brings further danger.

Here are some things you should avoid: 

  • Companies that don’t offer whitepapers. Whitepapers are the foundational document for that project. They include the strategy, objective, and goal for any blockchain-related project.
  • Some scam ICOs will hide their token sale progress under the pretense of individual contribution addresses; this prevents potential investors from seeing exactly how much has been raised and how much time remains in the sale.

About ICO’s 

An initial offering of coins, token sales, or token launches is similar to traditional crowd-financing. It is built to raise money for new cryptocurrency projects and to circumvent conventional, well-regulated capital building that banks and risk capitalists generally require. In the beginning, a coin or a token is exchanged for either legal tender or other cryptocurrencies from investors. Investors are usually drawn to these offers on the same grounds as they would invest in stocks – with a view to increasing the value of their coin or token after investment.

Are ICOs Securities?

The nature of an ICO or any other kind of cryptocurrency offering, according to federal securities law, depends on the characteristics of each particular transaction structure. It is regulated by the SEC if it is a security. In that case, tokens sold in an ICO should either be registered with SEC or eligible for registration exemption for example as a private placement.

 

We represent  ICO investors in the United States in pursuing damages for, or rescission of, fraudulent or otherwise unlawful virtual-token sales.

Cases

“The Securities and Exchange Commission today charged a digital-asset entrepreneur and his company with defrauding investors in an initial coin offering (ICO) that raised more than $42 million from hundreds of investors.

The SEC’s complaint alleges that from August 2017 to April 2018, Eran Eyal, founder of UnitedData, Inc. d/b/a Shopin, conducted a fraudulent unregistered securities offering by selling Shopin Tokens in an ICO.” https://www.sec.gov/news/press-release/2019-259

“The Securities and Exchange Commission today announced charges against Virginia-based Boon. Tech and its chief executive officer Rajesh Pavithran for fraud and registration violations in connection with a $5 million initial coin offering (ICO) of digital asset securities.

According to the SEC’s order, from November 2017 to January 2018, Boon. Tech and Pavithran raised approximately $5 million by selling Boon Coins to more than 1,500 investors in the U.S. and worldwide to raise funding to develop and market a platform to connect employers posting jobs with freelancers seeking work.” – https://www.sec.gov/news/press-release/2020-181

“The Securities and Exchange Commission today charged three individuals with defrauding hundreds of retail investors out of more than $11 million through two fraudulent and unregistered digital asset securities offerings.

According to the SEC’s complaint, filed in U.S. District Court for the Eastern District of New York, from approximately December 2017 through May 2018, Kristijan Krstic, founder of Start Options and Bitcoiin2Gen, and John DeMarr, the primary U.S.-based promoter for these companies, fraudulently induced investors to buy digital asset securities. The SEC alleges that from approximately December 2017 through late January 2018, Krstic and DeMarr touted Start Options’ purported digital asset mining and trading platform. According to the complaint, they falsely claimed Start Options was “the largest Bitcoin exchange in euro volume and liquidity” and “consistently rated the best and most secure Bitcoin exchange by independent news media.” – https://www.sec.gov/news/press-release/2021-22

Talk to us today about how we can help you recover from the losses resulting from your ICO involvement or investment in a blockchain or cryptocurrency business.

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