SEC bars perpetrator of Tomahawkcoins ICO fraud


ICO fraud

The U.S. Securities and Exchange Commission (SEC) has announced that it has obtained permanent officer-and-director and penny stock bars against the founder of a company who perpetrated a fraudulent initial coin offering (ICO) to fund oil exploration and drilling in California.

According to the SEC’s order, David T. Laurance and Tomahawk Exploration LLC attempted to raise money through the sale of blockchain-based digital tokens called “Tomahawkcoins.” The SEC’s order finds that the defendants’ promotional materials used inflated projections of oil production that were contradicted by the company’s own internal analysis and misleadingly suggested that Tomahawk possessed leases for drilling sites when it did not.

According to the order, the materials described Laurance as having a “flawless background” without disclosing his prior criminal conviction for his role in fraudulent securities offerings. The order also finds that Tomahawk claimed that token owners would be able to convert the Tomahawkcoins into equity and potentially profit from the anticipated oil production and secondary trading of the tokens. Although the ICO failed to raise money, Tomahawk issued tokens through a “Bounty Program” in exchange for online promotional services.

“Investors should be alert to the risk of old-school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs,” said Robert A. Cohen, Chief of the SEC’s Cyber Unit.

The SEC’s Office of Investor Education and Advocacy (OIEA) today issued an Investor Alert to encourage investors to check the background of anyone selling or offering them an investment using the free and simple search tool on Investor.gov. OIEA’s Investor Bulletin about ICOs is another resource that describes potential warning signs of investment fraud including “guaranteed” high investment returns and unlicensed sellers.

The SEC’s order finds that Tomahawk and Laurance violated the registration and antifraud provisions of the federal securities laws. Without admitting or denying the SEC’s findings, Tomahawk and Laurance consented to a cease and desist order and Laurance consented to an officer and director bar, penny stock bar, and a $30,000 penalty.

Related News

arrow

SEC bars perpetrator of Tomahawkcoins ICO fraud

1

Send this to a friend