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SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration Token

August 15, 2018 |

SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration Token

The U.S. Securities and Exchange Commission (SEC) has taken action against an oil and gas exploration company and its founder who “perpetrated a fraudulent initial coin offering (ICO) to fund oil exploration and drilling in California.” The token sale failed to raise money but the tokens were issued as part of a bounty program, which the SEC considers securities.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

SEC Took Action

SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration TokenThe SEC announced Tuesday that it has taken action against David Thompson Laurance and the oil and gas exploration company he founded, Tomahawk Exploration LLC. Laurance attempted to raise money by issuing digital tokens, tomahawkcoins (TOM).

Founded by Laurance in 2010, Tomahawk “engaged in an offering of Tomahawk securities that constituted penny stock,” the SEC described. The 76-year-old California resident is the sole managing member of Tomahawk.

“The SEC’s order finds that Tomahawk and Laurance violated the registration and antifraud provisions of the federal securities laws,” the Commission detailed, adding:

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.

The SEC has obtained a permanent officer and director bar against Laurance which prevents him from serving as an officer or a director of any SEC-reporting company.

The penny stock bar prohibits him from owning a penny stock in his own account as well as engaged in any activities related to an offering of a penny stock including acting as a promoter, finder, consultant, agent, broker, dealer, or issuer.

The Founder and his Company

According to the SEC, Laurance “perpetrated a fraudulent initial coin offering (ICO) to fund oil exploration and drilling in California.”

SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration TokenHe used “inflated projections of oil production that were contradicted by the company’s own internal analysis” in his promotional materials. In addition, he “misleadingly suggested that Tomahawk possessed leases for drilling sites when it did not,” the Commission clarified.

Tomahawk’s promo materials described Laurance as having a “flawless background,” omitting information about his prior criminal conviction for his role in fraudulent securities offerings. “Tomahawk also 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,” the SEC detailed.

Robert A. Cohen, Chief of the SEC’s Cyber Unit, warned:

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

No Money Raised but Bounty Tokens are Securities

SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration TokensTomahawk originally wanted to raise $ 5 million through the ICO after failing to raise funds through private investments and public capital markets.

The company, however, “failed to raise money through the ICO…[but] issued approximately 80,000 TOM as part of a ‘bounty program’ in exchange for online promotional and marketing services,” the SEC noted. Based on the facts and circumstances of the case, “TOM tokens are securities because they are investment contracts…and because they represent a transferable share or option on a security,” the Commission elaborated:

Tomahawk’s issuance of tokens under the bounty program constituted an offer and sale of securities because the company provided TOM to investors in exchange for services designed to advance Tomahawk’s economic interests and foster a trading market for its securities.

The SEC concluded that Tomahawk and Laurance violated the Securities Act by “offering and selling TOM without having a registration statement filed or in effect with the Commission or qualifying for an exemption from registration with the Commission.”

What do you think of the SEC’s action against Tomahawk and its founder? Let us know in the comments section below.


Images courtesy of Shutterstock and the SEC.


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The post SEC Fines and Permanently Bars Founder of Fraudulent Oil Exploration Token appeared first on Bitcoin News.

Bitcoin News

Wells Fargo to pay $1 billion in fines over auto, mortgage lending abuses

April 20, 2018 |

Federal regulators slapped Wells Fargo & Co. with a fine of $ 1 billion on Friday, punishing the San Francisco bank for abuses that harmed mortgage and auto loan borrowers, and for what regulators said was a pervasive and “reckless” lack of risk management.

The penalty, announced by the Office of…


L.A. Times – Business

State fines lenders for pushing borrowers into high-cost loans

March 13, 2018 |

High-cost lender Advance America will pay refunds to hundreds of California customers after a state regulator accused the firm of charging illegally high interest rates topping 100%.

The action, announced Monday, comes a few months after the Department of Business Oversight took actions against…


L.A. Times – Business

FCC fines Cesar Chavez Foundation over promotions on its radio stations

February 5, 2018 |

The Federal Communications Commission has levied a record fine against two farmworker radio stations in California and Arizona for overstepping restrictions against commercial advertising.

The Cesar Chavez Foundation, a nonprofit social service affiliate of the United Farm Workers union, agreed…


L.A. Times – Business

Judge fines CashCall $10.3 million, a fraction of what was sought by CFPB for lending law violations

January 24, 2018 |

A federal judge in Los Angeles has ordered Orange County lender CashCall Mortgage and its owner, J. Paul Reddam, to pay $ 10.3 million for violating consumer protection laws — a fraction of the $ 287 million in penalties and restitution sought by a federal regulator.

District Judge John Walter in…


L.A. Times – Business

EU Fines Qualcomm $1.23 Billion for Payments to Apple

January 24, 2018 |

Qualcomm was slapped with a $ 1.23 billion antitrust fine by the European Union for illegal payments it made to Apple for exclusively using its chips in smartphones and other products.
WSJ.com: US Business

South Korea Announces Crypto Traders Could Face Fines Under New System

January 14, 2018 |

South Korea Announces Crypto Traders Could Face Fines Under New System

The South Korean government has announced that cryptocurrency traders will be fined if they do not convert from existing virtual accounts, which allows for anonymous trading, to real-name accounts. Regardless of their service levels to crypto exchanges, banks have been ordered to implement the new system this month as planned.

Also read: South Korea Urges 23 Countries, EU, and IMF to Collaborate on Curbing Crypto Trading

Crypto Traders Facing Fines

South Korea Announces Crypto Traders Could Face Fines Under New SystemThe South Korean financial authorities said on Sunday that cryptocurrency traders in the country “will be fined for refusing to convert their virtual accounts into real-name ones,” Yonhap reported.

Currently, crypto traders are able to trade anonymously by using virtual accounts. However, the authorities have banned banks from issuing new ones and mandated them to install the new system “that ensures only real-name bank accounts and matching accounts at cryptocurrency exchanges to be used for deposits and withdrawals,” the news outlet detailed, adding that:

Cryptocurrency traders will be allowed to convert their virtual accounts into real-name ones within this month, but those who refuse to accede to real-name identification will face fines.

“People who have traded virtual currency have been told that if they refuse to check their real name, they will be penalized for depositing into an existing account,” the Kyunghyang Shinmun elaborated. Only withdrawals will be allowed from existing virtual accounts.

South Korea Announces Crypto Traders Could Face Fines Under New SystemSouth Korea first enforced the Real Name Financial Transaction System on August 3, 1993, forcing all financial transactions to be conducted under real names.

Until that time, financial transactions of large amounts between private parties were often conducted under false names or pseudonyms. In 2014, this law was revised and penalties of imprisonment of up to five years or a fine of 50 million won (~USD$ 47,000) were introduced.

While the amount of the fine has not been determined for violations by cryptocurrency traders, Yonhap pointed out that “In 1993, violators of the country’s real-name financial transaction system were slapped with fines amounting to 60 percent of their financial assets.”

Furthermore, Chosun quoted a government official saying, “Currently, we are establishing a taxation plan for virtual currency transactions centered on the accounting department. If a virtual currency real name verification system is introduced, we will be able to obtain data on individual traders.”

Banks Must Install the New System Regardless

The financial authorities started inspecting 6 major Korean banks at the beginning of last week for their anti-money laundering compliance related to virtual account services. The inspection was supposed to end on January 11 but the authorities decided to extend it to January 16. Following the extension announcement, banks became reluctant to implement the real-name system as mandated by the cryptocurrency regulation.

South Korea Announces Crypto Traders Could Face Fines Under New SystemShinhan Bank was the first to announce its decision not to implement this new system. The bank immediately sent a letter to each exchange it currently provides virtual account services to, informing them of its decision. Among them was Bithumb, South Korea’s largest cryptocurrency exchange. Following Shinhan’s move, other banks were also reportedly ready to follow suit and delay the implementation of the real-name system.

However, on January 13, the government held a meeting with representatives of the 6 banks and asked them to implement the new real-name system as planned, regardless of whether they decide to service crypto exchanges or not. A financial official was quoted by Hankook-Ilbo:

Even if virtual currency transactions are entirely illegal, the real name verification system needs to be introduced by itself.

Following the government’s instruction, banks reportedly agreed to implement the new system as planned.

What do you think of the Korean government imposing fines on cryptocurrency traders? What do you think of them making banks install the real-name system regardless? Let us know in the comments section below.


Images courtesy of Shutterstock and Shinhan Bank.


Need to calculate your bitcoin holdings? Check our tools section.

The post South Korea Announces Crypto Traders Could Face Fines Under New System appeared first on Bitcoin News.

Bitcoin News

California fines Anthem $5 million for failing to address consumer grievances

November 16, 2017 |

California’s managed-care regulator has fined insurance giant Anthem Blue Cross $ 5 million for repeatedly failing to resolve consumer grievances in a timely manner.

The state Department of Managed Health Care criticized Anthem, the nation’s second-largest health insurer, for systemic violations…


L.A. Times – Business

ECB Urges Fines for European States Breaking Reform Rules

August 11, 2017 |

The European Union should consider slapping large fines on European governments that fail to adopt its economic-reform proposals, the European Central Bank said.
WSJ.com: What’s News Europe

European Union fines Google a record $2.7 billion

June 27, 2017 |

The European Union’s competition watchdog has slapped a record $ 2.72 billion fine on Internet giant Google for breaching antitrust rules with its online shopping service.

European regulators said Tuesday that “Google has abused its market dominance as a search engine by giving an illegal advantage…


L.A. Times – Business