Last week, the U.S. Securities and Exchange Commission (SEC) announced that it has suspended all activity by the creator of Tomahawkcoin owing to fraudulent behavior regarding an initial coin offering (ICO).
David T. Laurence, the issuer of Tomahawkcoin tokens, has also been slapped with a $30 000 USD fine and a lifetime trading ban owing to the illicit activity which the SEC addresses in a press release.
Tomahawkcoin is the cryptocurrency token which works hand-in-hand with Laurence’s Tomahawk Exploration LLC, an oil and gas exploration company registered in Nevada.
The SEC document tells the story of Laurence’s misdemeanors, which were discovered owing to a shipping order with over-inflated prices. The order states that promotional materials for the Tomahawkcoin ICO had used inflated projections of oil production, which were contradictory to the internal analysis that the company had conducted, which gave the impression that Tomahawk had gained leases for drilling sites, although it did not.
The document also states that according to the order, “the materials described Laurance as having a “flawless background” without disclosing his prior criminal conviction for his role in fraudulent securities offerings.”
It was also found that Tomahawk had stated that investors in the token would be able to transact with the Tomahawkcoins and convert them into shares which could result in profit from the predicted oil production and secondary trading. Furthermore, despite the fact that the ICO had not managed to raise funds, the company issued coins as payment for online promotional services through a Bounty Program.
Robert A. Cohen, Chief of the SEC’s Cyber Unit offered advice regarding investing in projects:
“Investors should be alert to the risk of old-school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs”.
The SEC’s document concludes in a motion whereby it finds that Tomahawk and Laurance had violated specifications of the federal securities laws regarding registration and anti-fraud activity. SEC explain that Laurence and his company consented to a cease and desist order and the accused consented to the punishment of an officer and director bar, penny stock bar, and a $30,000 penalty. However, he did not admit nor deny to the accusations.