The SEC has brought a civil injunctive action in federal court against a California man claiming to be selling instructional packages, which also provided "points" that could be converted into digital assets known as PRO Currency. The agency claims that the multilevel marketing companies offering the packages and digital tokens were involved in a fraudulent pyramid scheme which raised over $25 million between January 2017 and March 2018 in an unregistered securities offering. The SEC further alleges that Daniel Pacheco, the mastermind behind the companies providing the instructional packages and tokens, which traded on several cryptocurrency exchanges, used a portion of the funds raised to purchase a new home for $2.5 million and to buy a Rolls-Royce for himself. The SEC also seeks the return of the proceeds from various relief defendants, apart from Pacheco.
The messaging app Kik, which raised $100 million in 2017 in an ICO of the Kin token, and which was recently told by the SEC that it is likely to be sued by the agency for an unregistered securities offering, appears to be preparing financially for its defense and a long fight. It recently set up a crowdfunding campaign, complete with a podcast explaining its proposed defense, to raise $5 million.
For several years, Grayscale Investments has been offering to accredited investors the opportunity to purchase interests in Bitcoin, Ethereum and several other large-cap cryptocurrencies through its trust structure, with the hope and expectation that after a one-year holding period, the trust interests would be available for sale legally in a secondary market. This has previously been the case for Bitcoin under the symbol GBTC, which has been available for trading in the over-the-counter market since early last year. Within the past two months, that also became true for Ethereum Classic. Late last week, Grayscale announced that FINRA had approved the secondary market trading of its Ethereum Trust shares, each of which is the equivalent of about 1/10th of an ether. Once trading begins, all investors, not just those whom are deemed accredited, will be able to purchase interests in this digital asset in their traditional and IRA brokerage accounts.
To read more about the topics covered in this week's post, see the following:
- SEC Sues Alleged Perpetrator of Fraudulent Pyramid Scheme Promising Investors Cryptocurrency Riches
- Kin Launches $5 Million DefendCrypto Fund to Take on the SEC
- Grayscale to Open Ethereum Trust to Individual Investors
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