HempCoin promoter charged with unlawful distribution of crypto securities

HempCoin promoter charged with unlawful distribution of crypto securities

Getting your Trinity Audio player ready...

The Financial Industry Regulatory Authority (FINRA) has charged the promoter of an ‘unregistered cryptocurrency security’ with a number of complaints, including securities fraud. If upheld, the charges could result in a fine or even a ban from operating in the financial industry, with a decision in front of a FINRA disciplinary panel pending.

The charges were levelled against Timothy Tilton Ayre, the promoter of a scheme called HempCoin. The resident of Agawam, Mass., is charged with promoting the token as an unregulated security, which has been described as “the first minable coin backed by marketable securities.”

Specifically, Ayre is charged with unlawfully distributing an unregistered security, as well several counts of fraud on the basis of false representations made to investors.

In a statement, FINRA clarified the nature of the charges brought against Ayre and the ill-fated HempCoin venture.

“Ayre marketed HempCoin as ‘the world’s first currency to represent equity ownership’ in a publicly traded company and promised investors that each coin was equivalent to 0.10 shares of RMTN common stock. Investors mined more than 81 million HempCoin securities through late 2017 and bought and sold the security on two cryptocurrency exchanges,” according to the government agency, noting that Ayre “never registered HempCoin and no exemption to registration applied.”

However, FINRA stressed that the charges don’t “represent a decision as to any of the allegations contained in the complaint”, and that Ayre still has the option to respond to the charges.

“Under FINRA rules, a firm or individual named in a complaint can file a response and request a hearing before a FINRA disciplinary panel. Possible remedies include a fine, censure, suspension or bar from the securities industry, disgorgement of gains associated with the violations and payment of restitution,” FINRA stated.

The case is the first example of FINRA taking enforcement action around an unlawful crypto project, and unlikely to be the last, as FINRA continues to gather information on different tokens and initial coin offerings (ICOs).

New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.