BlockChain & Cryptos | |
BlockChain & Cryptos | |
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Wednesday,
September 12, 2018 08.45AM / FINRA
FINRA announced yesterday that it filed a
complaint against Timothy Tilton Ayre of Agawam, Massachusetts, charging him
with securities fraud and the unlawful distribution of an unregistered
cryptocurrency security called HempCoin. This case represents
FINRA’s first disciplinary action involving cryptocurrencies.
In the complaint, FINRA alleges that,
from January 2013 through October 2016, Ayre 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” – and by making fraudulent, positive
statements about RMTN’s business and finances. RMTN was quoted on the Pink
Market of OTC Markets Group and traded over the counter.
According to the complaint, FINRA also
alleges that in June 2015, Ayre bought the rights to HempCoin and repackaged it
as a security backed by RMTN common stock.
Ayre marketed HempCoin as “the world’s
first currency to represent equity ownership” in a publicly traded company
and promised investors that each coin was equivalent to 0.10 shares of RMTN
common stock. Investors mined more than 81 million HempCoin securities through
late 2017 and bought and sold the security on two cryptocurrency exchanges.
FINRA charges Ayre with the unlawful distribution of an unregistered security
because he never registered HempCoin and no exemption to registration applied.
In addition, FINRA alleges that, from
January 2013 through October 2016, 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.
For more information about
cryptocurrencies and the risks of investing in them, read FINRA’s Investor
Alert, Don’t
Fall for Cryptocurrency-Related Stock Scams.
The issuance of a disciplinary complaint
represents the initiation of a formal proceeding by FINRA in which findings as
to the allegations in the complaint have not been made, and does not represent
a decision as to any of the allegations contained in the complaint. Under FINRA
rules, a firm or individual named in a complaint can file a response and
request a hearing before a FINRA disciplinary panel. Possible remedies include
a fine, censure, suspension or bar from the securities industry, disgorgement
of gains associated with the violations and payment of restitution.
FINRA is a not-for-profit organization
dedicated to investor protection and market integrity. It regulates one
critical part of the securities industry – brokerage firms doing business with
the public in the United States. FINRA, overseen by the SEC, writes rules,
examines for and enforces compliance with FINRA rules and federal securities
laws, registers broker-dealer personnel and offers them education and training,
and informs the investing public. In addition, FINRA provides surveillance and
other regulatory services for equities and options markets, as well as trade
reporting and other industry utilities. FINRA also administers a dispute
resolution forum for investors and brokerage firms and their registered
employees.
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