ICO Promoters CoinLaunch Fined CAD $50,000 By Ontario Securities Commission
A week ago, the Ontario Securities Commission (OSC) announced a fine for ICO promoters CoinLaunch for conducting unregistered ICOs.
Commercial litigator, economist, and former coder, Evan Thomas took this news to warn other ICO/STO projects about facing the same consequences.
ICO/STO consultants take note: the Ontario Securities Commission has sanctioned a “crypto consultant” for providing marketing and promotional services in connection with two token offerings. A thread. https://t.co/NYKYnIZdq2
— Evan Thomas (@evanmthomas) July 26, 2019
Evan says that CoinLaunch is a consulting company for cryptocurrency based businesses that advertised that it would help market and promote token offerings, including deploying the tokens on-chain, writing and distributing white papers, advising on structure, and so on. However, the problem is that if tokens are securities, CoinLaunch was holding itself out as engaged in the business of trading in securities, which begins a claim to designate as a dealer under Ontario securities law.
He goes on to say that the problem was when the firm consulted on two token offerings – BCZERO, to raise money for a Czech off-road truck racing team, and ECOREAL, to raise capital for a Portuguese resort. These were found to be investment contracts by the OSC and the result of which was being proved security.
“The OSC panel did say that each individual activity wasn’t necessarily an “act in furtherance” of trade; instead, it was looking at the marketing program as a whole and emphasized how it was “instrumental and central” to the solicitation of investors. In the end, CoinLaunch agreed to pay a total of around $50,000 under a settlement. CoinLaunch’s CEO also undertook to delete the keys for the tokens received as compensation.”
The Settlement Agreement proposes monetary sanctions and costs are an administrative penalty od $30,000, disgorgement in the amount of $12,233.06, and costs in the amount of $10,000. The OSC has confirmed that all monetary sanctions and proposed costs have been paid.
“In our view, the sanctions proposed by the parties take into consideration the seriousness of the misconduct. The settlement is reasonable and its approval is in the public interest. An order will be issued following this hearing in substantially the form proposed by the parties.”