ICO

Founder and CEO of Purported Online Adult Entertainment Marketplace, is Charged by SEC in Fraudulent ICO

In one of the important development which is bound to harm the crypto world, The U.S. Securities and Exchange Commission (SEC) has charged Jonathan C. Lucas, Former Founder & CEO of Purported Online Adult Entertainment Marketplace for a fraudulent initial coin offering (ICO).

Fraudulent ICO and Lawsuit

According to the SEC’s lawsuit filed, Lucas floated ICO in the market in August 2017 and raised around $63,000 in the form of cryptocurrency by selling unregistered security to more than a hundred investors. The information that was given in the white paper and other marketing activities related to ICO was entirely false with Lucas making many misleading claims to lure investors. Lucas lied about the “working-beta” platform of the company although, in reality, no beta version existed. Also, investors were misinformed that the company’s management, which, according to false claims, consisted of many industry and technology veterans. Lucas even exaggerated his own experience to raise funds. Once this issue got the media attention, Lucas returned the investors’ money to avoid further complications.

Acts and Provisions

The federal district court in Manhattan has charged Lucas under several different sections relating to antifraud provisions of the Securities Exchange Act. More specifically, the lawsuit filed in the court has invoked section 17(a) of the Securities Act, section 10(b) and Rule 10b-5 (Securities Exchange Act 1934), and sections 5(a) and 5(c) of the Securities Act.

Lucas consents the filing by SEC, and the judge imposes a permanent injunction, a penalty of $15,000, a 5-year bar (director and officer), and a 5-year ban on participating in any unregistered security offering except the one which has to be used for a personal account. The settlement is yet to be approved by the court. This investigation was carried out under the supervision of Lara S. Mehraban by Jon Daniels (Cyber unit of SEC), and Wendy Tepperman, Cynthia Matthews, and Richard Hong (all three work in Regional New York office of SEC).

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David Cox

David is a finance graduate and crypto enthusiast. He projects his expertise in subjects like crypto and Blockchain while writing for CryptoNewsZ. Being from Finance background, he efficiently writes Price Analysis. Apart from writing, he actively nurtures hobbies like sports and movies.
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