The United States Securities and Exchange Commission (SEC) has fined the founder of a scam ICO project. The erring project head has also been issued a lifetime ban by the Commission.

The Commission, on August 14, obtained a permanent officer-and-director order against David T. Laurance. According to the Commission, Laurance and his company, Tomahawk Exploration LLC, sought to raise money through a ‘Tomahawkcoins’ token sale. Laurance’s promotional materials used inflated projections of oil production that were contrary to the company’s internal analysis. This suggested that Tomahawk had leases for drilling wells when in reality, it didn’t.

Furthermore, the defendant’s perfect background was faked, as there was no mention of his past criminal record. The SEC order also stated thus:

“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.”

According to the regulatory body, Tomahawk and Laurance breached the registration and antifraud provisions of the federal securities laws. Laurance has neither denied nor admitted the allegations leveled against him. However, Laurance and his company, Tomahawk, have agreed to a cease and desist order. Laurance agreed to an officer and director bar, penny stock bar, and a penalty worth $30,000.

Chief of the SEC’s Cyber Unit, Robert A. Cohen, issued a warning to investors, saying:

“Investors should be alert to the risk of old-school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs.”

In a similar case from earlier this year, cofounders of a controversial cryptocurrency startup, Centra Tech, were charged with fraud concerning the company’s $32 million ICO in September 2017. The co-founders, Sam Sharma, Ray Trapani, and Robert Farkas, were charged and arrested for defrauding investors.

According to the SEC, text messages among the trio revealed their fraudulent intent. The startup falsely claimed that it would create a cryptocurrency debit card backed by Visa and Mastercard. In August 2017, celebrities like Floyd Mayweather promoted its fundraising effort. On May 2018, the cofounders were indicted in a Manhattan Federal Court, and the government recovered digital funds worth more than $60 million.

Many ICO schemes that surface are nothing but blatant exit scams. There have been numerous examples of these pump and dump schemes that defraud investors and get away with it. The Chinese government is currently investigating an exit scam pulled by Shenzhen Puyin Blockchain Group, a Chinese blockchain company that ran three ICOs and raised $60 million. Block Broker, another ICO exit scam, lured investors by gaining five stars on ICO review services. After the company raised $3 million, it was nowhere to be found.

The post SEC Slaps Fraudulent Cryptocurrency ICO Founder with Fine and Lifetime Ban appeared first on UNHASHED.

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