New Jersey Sues Pocketinns for Selling Unregistered Securities
- The company was aiming to raise $46 million by selling the tokens.
The state of New Jersey has filed a complaint against Pocketinns for selling unregistered securities through an Initial Coin Offering (ICO) Initial Coin Offering (ICO) An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Accompanying most major ICOs has been the prevalence of a whitepaper. A whitepaper serves as both a persuasive sales pitch, and in-depth report on a specific topic that presents a problem and provides a solution. Most marketers relied on whitepapers to educate their respective audience about a particular issue, or explain and promote a particular methodology that an ICO could potentially solve. The information enclosed in whitepapers have historically been met with skepticism.Why ICOs Have Fallen Out of FavorThis is due in large part to the early days of ICOs, as this practice was highly unregulated and extremely risky. Because there were no regulations delineating who could and could not hold an ICO, many bad actors or incompetent technologists saw the practice as an opportunity to grab a lot of fast cash.As a result, many investors have lost quite a lot of money – their tokens were either never returned to them, or the companies who issued the tokens failed within several months of the token’s official launch.Regulators around the world have cracked down on the practice, which has resulted in a slightly “cleaner” ICO space.However, ICOs have garnered a pretty bad reputation and are still regarded as generally untrustworthy. As such, other methods of fundraising, such as Initial Exchange Offerings (IEOs) and Security Token Offerings (STOs) have been born. An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Accompanying most major ICOs has been the prevalence of a whitepaper. A whitepaper serves as both a persuasive sales pitch, and in-depth report on a specific topic that presents a problem and provides a solution. Most marketers relied on whitepapers to educate their respective audience about a particular issue, or explain and promote a particular methodology that an ICO could potentially solve. The information enclosed in whitepapers have historically been met with skepticism.Why ICOs Have Fallen Out of FavorThis is due in large part to the early days of ICOs, as this practice was highly unregulated and extremely risky. Because there were no regulations delineating who could and could not hold an ICO, many bad actors or incompetent technologists saw the practice as an opportunity to grab a lot of fast cash.As a result, many investors have lost quite a lot of money – their tokens were either never returned to them, or the companies who issued the tokens failed within several months of the token’s official launch.Regulators around the world have cracked down on the practice, which has resulted in a slightly “cleaner” ICO space.However, ICOs have garnered a pretty bad reputation and are still regarded as generally untrustworthy. As such, other methods of fundraising, such as Initial Exchange Offerings (IEOs) and Security Token Offerings (STOs) have been born. Read this Term).
The state’s Attorney General’s office and the New Jersey Bureau of Securities have filed the legal complaint against the company along with its president Sarvajnya G. Mada.
“Our securities laws apply to anyone offering or selling securities in this state, regardless of whether those securities are purchased with U.S. dollars or virtual currencies, and regardless of whether they are distributed in certificated form or through blockchain technology,” Gurbir S. Grewal, New Jersey’s Attorney General, said.
Crackdown against unregistered securities
The lawsuit alleged that the company violated the state’s securities law and sold the tokens to 217 investors, only 11 of whom submitted their documentation for being accredited investor. It further alleged that Mada acted as an unregistered agent, further violating the state’s laws.
“The lawsuit we filed makes it clear that individuals selling cryptocurrency-related investment products in New Jersey must comply with the law or face serious consequences,” Grewal added.
The company received funds in Ether from the investors and was aiming to raise up to $46 million by selling 30 million PINNS tokens.
“By failing to take reasonable steps to verify that purchasers were accredited investors capable of bearing the increased risks associated with unregistered securities, the defendants violated the law and exposed investors to financial losses that could have been devastating,” Paul Rodríguez, acting director of the Division of Consumer Affairs, said.
Meanwhile, the Securities and Exchange Commission (SEC) is also in a constant pursuit for unregistered tokenized securities offerings and shady projects. In May, the agency sued the owner of iPro Network for making false claims while raising $26 million.
The state of New Jersey has filed a complaint against Pocketinns for selling unregistered securities through an Initial Coin Offering (ICO) Initial Coin Offering (ICO) An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Accompanying most major ICOs has been the prevalence of a whitepaper. A whitepaper serves as both a persuasive sales pitch, and in-depth report on a specific topic that presents a problem and provides a solution. Most marketers relied on whitepapers to educate their respective audience about a particular issue, or explain and promote a particular methodology that an ICO could potentially solve. The information enclosed in whitepapers have historically been met with skepticism.Why ICOs Have Fallen Out of FavorThis is due in large part to the early days of ICOs, as this practice was highly unregulated and extremely risky. Because there were no regulations delineating who could and could not hold an ICO, many bad actors or incompetent technologists saw the practice as an opportunity to grab a lot of fast cash.As a result, many investors have lost quite a lot of money – their tokens were either never returned to them, or the companies who issued the tokens failed within several months of the token’s official launch.Regulators around the world have cracked down on the practice, which has resulted in a slightly “cleaner” ICO space.However, ICOs have garnered a pretty bad reputation and are still regarded as generally untrustworthy. As such, other methods of fundraising, such as Initial Exchange Offerings (IEOs) and Security Token Offerings (STOs) have been born. An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Accompanying most major ICOs has been the prevalence of a whitepaper. A whitepaper serves as both a persuasive sales pitch, and in-depth report on a specific topic that presents a problem and provides a solution. Most marketers relied on whitepapers to educate their respective audience about a particular issue, or explain and promote a particular methodology that an ICO could potentially solve. The information enclosed in whitepapers have historically been met with skepticism.Why ICOs Have Fallen Out of FavorThis is due in large part to the early days of ICOs, as this practice was highly unregulated and extremely risky. Because there were no regulations delineating who could and could not hold an ICO, many bad actors or incompetent technologists saw the practice as an opportunity to grab a lot of fast cash.As a result, many investors have lost quite a lot of money – their tokens were either never returned to them, or the companies who issued the tokens failed within several months of the token’s official launch.Regulators around the world have cracked down on the practice, which has resulted in a slightly “cleaner” ICO space.However, ICOs have garnered a pretty bad reputation and are still regarded as generally untrustworthy. As such, other methods of fundraising, such as Initial Exchange Offerings (IEOs) and Security Token Offerings (STOs) have been born. Read this Term).
The state’s Attorney General’s office and the New Jersey Bureau of Securities have filed the legal complaint against the company along with its president Sarvajnya G. Mada.
“Our securities laws apply to anyone offering or selling securities in this state, regardless of whether those securities are purchased with U.S. dollars or virtual currencies, and regardless of whether they are distributed in certificated form or through blockchain technology,” Gurbir S. Grewal, New Jersey’s Attorney General, said.
Crackdown against unregistered securities
The lawsuit alleged that the company violated the state’s securities law and sold the tokens to 217 investors, only 11 of whom submitted their documentation for being accredited investor. It further alleged that Mada acted as an unregistered agent, further violating the state’s laws.
“The lawsuit we filed makes it clear that individuals selling cryptocurrency-related investment products in New Jersey must comply with the law or face serious consequences,” Grewal added.
The company received funds in Ether from the investors and was aiming to raise up to $46 million by selling 30 million PINNS tokens.
“By failing to take reasonable steps to verify that purchasers were accredited investors capable of bearing the increased risks associated with unregistered securities, the defendants violated the law and exposed investors to financial losses that could have been devastating,” Paul Rodríguez, acting director of the Division of Consumer Affairs, said.
Meanwhile, the Securities and Exchange Commission (SEC) is also in a constant pursuit for unregistered tokenized securities offerings and shady projects. In May, the agency sued the owner of iPro Network for making false claims while raising $26 million.