Massachusetts Securities Division Takes Enforcement Action Against Caviar ICO, based in Cayman

The Massachusetts Secretary of the Commonwealth Securities Division has filed an administrative complaint against Kirill Bensonoff and Caviar, a Cayman Island company. Bensonoff is said to own a home in Brookline, Massachusetts and is described as attempting to avoid US securities laws by operating out of Cayman.

Caviar is in the midst of an initial coin offering (ICO) that has ostensibly raised $3.1 million in a token crowdsale goal of $25 million. The complaint states that Caviar and Bensonoff offered the sale of unregistered securities. The tokens are said to offer quarterly dividends from a pooled investment fund of cryptocurrencies and real estate date.

The enforcement action seeks an order for Caviar to do the following:

  • requiring Respondents to permanently cease and desist from further conduct in violation of the Act [Massachusetts regulations];
  • requiring Respondents to offer rescission to all investors from whom they have received funds
  • requiring Respondents to provide a verified accounting ofall proceeds which were received as a result of the alleged wrongdoing;
  • requiring Respondents to disgorge all profits and other direct or indirect remuneration received from the alleged wrongdoing;
  • imposing an administrative fme on Respondents in such amount and upon such terms and conditions as the Director or Presiding Officer may determine;

The Caviar ICO is described as providing a screening process to block the sale of tokens to US residents but these measures are deemed inadequate to prevent the sale to US citizens.

The Massachusetts Secretary of the Commonwealth, William Galvin, warned about “Bitcoin Mania” in December. Galvin stated;

“Bitcoin is just the latest in a history of speculative bubbles that most often burst, leaving the average investors with a worthless product,” Secretary Galvin said. “Going back to the 1600s with tulip mania to the present Bitcoin craze, chasing the next best thing will, more often than not, end in disaster for the average investor.”

Massachusetts called Bitcoin and other digital currency as fertile ground for “investment scams and other financial fraud.”

This is the latest action by a state regulatory. Most recently, the state of Texas took action against a planned ICO by Bitconnect based in the United Kingdom.

Massachusetts Administrative-Complaint-E-2017-0120

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