FINRA Charges “HempCoin” ICO-Issuer with “Unlawful Distribution of Cryptocurrency Securities”

FINRA announced today that it has charged the Massachusetts creator of the “HempCoin” ICO (initial coin offering) with securities fraud and, “the unlawful distribution of an unregistered cryptocurrency security…”

FINRA, a Washington, DC-based self-regulatory organization of considerable might that presides over American securities brokers, claims that, from January 2013 through October 2016, Timothy Ayre of Agawam, Massachusetts:

“…attempted to lure public investment in his worthless public company, Rocky Mountain Ayre, Inc. (RMTN) by issuing and selling HempCoin – which he publicized as ‘the first minable coin backed by marketable securities,’ (Rocky Mountain Ayre common stock).”

Based on the understanding that each RMTN crypto coin was backed by 0.10 shares of RMTN common stock, says FINRA:

“Investors mined more than 81 million HempCoin securities through late 2017 and bought and sold the security on two cryptocurrency exchanges.”

Ayre, however, failed to register his undertaking:

“FINRA charges Ayre with the unlawful distribution of an unregistered security because he never registered HempCoin and no exemption to registration applied.”

The scheme ran for several years, says FINRA, from January 2013 to October 2016, during which, “Ayre defrauded investors in RMTN by making materially false statements and omissions regarding the nature of RMTN’s business, failing to disclose his creation and unlawful distribution of HempCoin, and making multiple false and misleading statements in RMTN’s financial statements.”

FINRA characterizes this case as its, “first disciplinary action involving cryptocurrencies.”

Individuals can respond to FINRA charges by, “request(ing) a hearing before a FINRA disciplinary panel,” and may face considerable penalties:

“Possible remedies include a fine, censure, suspension or bar from the securities industry, disgorgement of gains associated with the violations and payment of restitution.”

 

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