A company founder who perpetrated a fraudulent initial coin offering (ICO) to fund oil exploration and drilling in California has been barred by the US Securities and Exchange Commission (SEC).
David T. Laurance and his company, Tomahawk Exploration, attempted to raise money through the sale of blockchain-based digital tokens called Tomahawkcoins. Promotional materials used inflated projections of oil production that were contradicted by the company’s own internal analysis and misleadingly suggested Tomahawk possessed leases for drilling sites when it did not.
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. Tomahawk claimed token owners would be able to convert the Tomahawkcoins into equity and potentially profit from the anticipated oil production and secondary trading of the tokens.
Although the ICO failed to raise money, Tomahawk issued tokens through a “Bounty Programme” in exchange for online promotional services.
“Investors should be alert to the risk of old school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs,” says Robert A. Cohen, Chief of the SEC’s Cyber Unit.
Tomahawk and Laurance consented to a cease and desist order and Laurance agreed to an officer and director bar, penny stock bar and a $30,000 (£23,572) penalty.
The SEC’s Office of Investor Education and Advocacy has issued an alert to encourage investors to check the background of anyone selling or offering them an investment, using a free search tool on Investor.gov.
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