A fraudulent ICO called Tomahawkcoins that claimed to be raising funds for oil exploration and drilling has been fined $30,000 by the U.S. Securities and Exchange Commission (SEC).
The founder of the ICO, David Laurance, registered a company called Tomahawk Exploration LLC and promised early funders massive returns on their investment. The company falsely claimed to have leases for exploration of oil sites and told investors that they would be able to convert their tokens into fiat currency for profit. Investors were not made aware that Laurance had previous convictions for securities fraud.
Despite efforts to promote the ICO via bounty rewards, Tomahawkcoins failed to raise its intended fundraising target.
In addition to a $30,000 fine, the SEC issued Tomahawkcoins and Laurance with a cease and desist order for violating antifraud and registration provisions of the federal securities law.
The SEC once again issued a warning to investors to be wary of ICO’s and cryptocurrency-related schemes, especially those related to gas and oil projects.
Earlier this year the Wall Street Journal released a report highlighting the extent of ICO fraud in the cryptocurrency industry. The report found that 271 out of 1450 tokens were indicative of fraud, costing investors $1 billion in losses.
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