The US Securities and Exchange Commission (SEC) has charged Loci Inc. and its CEO John Wise for fraud and conducting an unlawful initial coin offering (ICO) from August 2017 through January 2018.
According to a press release on Tuesday, June 22nd, the US SEC has charged John Wise and his company Loci Inc. with a $7.6 million civil penalty for allegedly selling an unregistered digital asset LOCIcoins, and making false statements related to its sale.
According to an SEC order:
“From August 2017 to January 2018, Loci, a developer of a software platform called InnVenn, raised $7.6 million by offering and selling digital tokens called “LOCIcoin” through an unregistered and fraudulent initial coin offering (“ICO”). In promoting the ICO, Loci and its founder and Chief Executive Officer, Wise, made numerous materially false and misleading statements, touted the value of LOCIcoin to investors, highlighted their efforts to make LOCIcoin available for trading on digital asset trading platforms, and claimed that LOCIcoin would increase in price as a result of their efforts.”
SEC alleges that John Wise made statements concerning the company’s revenues, number of employees, and InnVenn’s user base. The initial coin offering (ICO) featuring LOCIcoins tokens were securities but the Loci’s offering was not registered with the SEC and no exemption from registration applied. Furthermore, the SEC order finds that Wise misused $38,163 in investor proceeds to pay his personal expenses.
The order imposes a imposes a $7.6 million civil penalty against Loci and bars John Wise form working as officer or director of any organization. The Tuesday release states:
“Without admitting or denying the SEC’s findings, Loci and Wise agreed to a cease and desist order and to undertakings to destroy their remaining tokens, request the removal of the tokens from trading platforms, publish the SEC’s order on Loci’s social media channels, and refrain from participating in future digital asset securities offerings.”
This shows that US regulators are still following the fraudulent crypto projects that defrauded investors money during the 2017 ICO bubble. According to a recent report from the blockchain analysis firm Elliptic, regulators from the SEC, Commodity Futures Trading Commission and Financial Crimes Enforcement Network have imposed fines of more than $2.5 billion on cryptocurrency-related businesses since 2014.
Most of that comes from unregistered securities offerings or ICOs. Of the $2.5 billion, $1.69 billion came from actions brought by the SEC. $1.38 billion of them came from unregistered securities offerings.