{"id":9266,"date":"2018-08-14T23:41:22","date_gmt":"2018-08-14T23:41:22","guid":{"rendered":"https:\/\/davidgerard.co.uk\/blockchain\/?p=9266"},"modified":"2018-08-15T15:05:03","modified_gmt":"2018-08-15T15:05:03","slug":"sec-v-tomahawk-free-ico-tokens-constitute-a-sale-of-securities","status":"publish","type":"post","link":"https:\/\/davidgerard.co.uk\/blockchain\/2018\/08\/14\/sec-v-tomahawk-free-ico-tokens-constitute-a-sale-of-securities\/","title":{"rendered":"SEC v. Tomahawk: “Free” ICO tokens constitute a sale of securities"},"content":{"rendered":"

Today, the SEC penalised the Tomahawk ICO<\/a> as a straight-up fraud. Here’s the\u00a0Order Instituting Administrative and Cease-And-Desist Proceedings<\/a> (PDF).<\/p>\n

\"\"<\/a>Tomahawk Exploration LLC was a Nevada resource company, founded in 2010.<\/a> It\u00a0 ran the TomahawkCoin ICO from 30 July to 30 August 2017\u00a0\u2014 part of the “classic” era of ICOs, when any bozo could and did offer unregistered securities to the general public,<\/a> but on the blockchain.<\/p>\n

TomahawkCoin<\/a> was a tokenised offer of oil and gas resources, selling 100 million tokens on the Waves blockchain.<\/p>\n

Here’s the Bitcointalk announcement and bounty campaign,<\/a> with lots of promotional links. The white paper is still up<\/a> (archive<\/a>), featuring erratic spelling and grammar and Word 95 clip-art fonts.<\/p>\n

The plan was to use the ICO takings to turn Tomahawk Exploration LLC into a publicly-traded penny stock, and fund the cost of drilling ten oil wells. ICO token holders would be able to exchange their tokens for shares in the company.<\/p>\n

The board members were founder David Laurance, Rick Shadwell\u00a0\u2014 “Rick is always continuing his education, and posts his scientific research papers and articles at www.ShaddockResearch.org<\/a> such as the study showing that years of practicing Transcendental Meditation (TM) is correlate positively with Critical Thinking Ability (CTA) and open mindedness.” \u2014 and Horia Cretan, who has left Tomahawk off his LinkedIn,<\/a> for some reason.<\/p>\n

Just to assuage any fears about ICO scammers,<\/em> the white paper reassures the reader that “We are distinct from Paycoin and other failed promises hidden behind virtual currencies in the past” \u2014 phew!<\/p>\n

 <\/p>\n

\"\"<\/a><\/p>\n

 <\/p>\n

The SEC noted (paragraph 16) that “Investors would have been reasonable in relying on Tomahawk and Laurance to generate revenue and potential profit on their behalf” as Laurance had cited his decades of experience in the area\u00a0\u2014 though most of that was in repeated business failure, and the occasional criminal conviction.<\/p>\n

The oil and gas, it turned out, didn’t exist. And Laurance had been convicted in 1993 of mail fraud concerning penny stock companies \u2014 per chapter 4<\/a> of the book,<\/a> crypto scammers often turn out to be serial scammers\u00a0\u2014 which made representing himself as one of a group of “refined successful citizens with flawless backgrounds” a material misstatement.<\/p>\n

The sanctions imposed on Laurance over the Tomahawk ICO were:<\/p>\n