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The United States Securities and Exchange Commission (SEC) has announced settlement charges against Loci Inc and its CEO, John Wise, for misleading investors into purchasing its cryptocurrency in 2017.
According to a press release today, Loci raised $7.6 million via the sale of its native cryptocurrency dubbed LOCIcoin from August 2017 to January 2018. The SEC noted that he had lured investors through lies told about the company’s revenue, staff strength, and the user base for its InnVenn solution — an intellectual property search engine for content creators.
Commenting on the development, Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit said the company gave false information to investors about important aspects of its business, adding:
“Investors in digital asset securities are entitled to truthful information and fulsome disclosures so they can make informed investment decisions.”
Not only did Loci entice investors to purchase its cryptocurrency with false statements, the firm also failed to register its offering with regulators, the announcement added.
During the course of investigation the U.S. regulators discovered that part of investors’ funds worth $38,163 were lavished on personal expenses. It is worth noting that the firm, alongside its CEO, did not admit or deny any of the charges filed against them.
The Verdict
Notably, Wise and Loci’s decision to mislead investors and conduct an unregistered security offering in the United states violates the SEC’s antifraud provisions of Section 10(b) and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933.
Based on this violation, Loci, an officer, and Wise have been slammed with a $7.6 million civil penalty.
The involved parties agreed to a cease and desist order, and also signed an undertaking to destroy the remaining LOCIcoin and remove the cryptocurrency from any exchange it has so far been listed on.
Furthermore, Loci also agreed to publish the SEC order on its website and social media platforms to notify investors, and will also cease to participate in future cryptocurrency offerings.
The SEC has always frowned at unregistered security offerings within its jurisdiction, with heavy fines slammed on firms guilty of the act. Last year, Enigma MPC was slammed with a $500,000 penalty by the SEC for conducting an unregistered ICO that saw it raise $45 million in 2017.
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