26 Sep 2019
Another crypto related business has come into the US Securities and Exchange Commission’s crosshairs. The regulator has pressed charges against Jonathan Lucas, the founder of Fantasy Market. The platform is said to be an online marketplace for adult entertainment.
A press release from the SEC says that Lucas conducted an illegal ICO in August 2017. During this ICO, Fantasy Market attracted $63,000 from over 100 investors. After the ICO, it turned out that the purported adult entertainment marketplace was non-existent and that the investors had been duped. Lucas released a whitepaper which contained false information about the non-existent platform and was designed to mislead potential investors into purchasing the tokens.
Lucas went on to tell investors that a working beta version of the adult entertainment platform existed when it did not. He created a fake management team to convince investors that a legitimate firm had been set up and was running. Lucas presented false information about his experience in the business, leading investors to believe that they were working with one of the best in the industry.
Several investors lodged complaints with relevant regulatory authorities, and this brought the issue to the media’s attention. Pressure from the media, investors, and regulators resulted in Lucas returning funds to the investors who had bought tokens during Fantasy Market’s ICO. Although the funds have been returned, the SEC is proceeding with its case against Lucas.
After the SEC made its case against Lucas, the accused chose not to deny or accept the allegations being leveled against him. Instead, Lucas opted to the entry of a final judgment. This judgment will likely impose permanent injunctions from violations of the provisions from which charges have been derived.
When the court hands down its judgment, Lucas will be expected to pay a civil penalty of $15,000. Accompanying the penalty will be a ban from participating in any illegal securities offerings. Given that most ICOs are viewed as illegal securities offerings in the US, Lucas’ participation in any ICO may place him on the SEC’s radar again.
Over the course of this year, the SEC has stepped up its efforts to combat token offerings that violate securities laws. Several American citizens have lost billions of dollars to ICO scams, and the regulator is intent on ensuring that fewer people fall victim to these fraudulent schemes.
A few weeks ago, the SEC charged a crypto marketing firm named ICOBox for running an illegal ICO worth $14 million. The regulatory body claims that ICOBox sold unregistered securities thought its digital token offering. ICOBox helped many other crypto firms to run ICOs of their own and the SEC is charging the firm for operating as an unregistered broker. ICOBox reportedly helped other crypto related companies raise over $650 million through ICOs.
Kik Interactive has also recently come under scrutiny from the SEC. The SEC alleges that Kik illegal sold securities during its ICO for its crypto-asset called Kin. Kik denies the allegations and has opted that the matter is taken to court.
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