SEC Nixes Fraudulent Tomahawk ICO, Bars Company Founder

The US watchdog has imposed fines and prohibitions on the company which attempted to raise money issuing the so-called Tomahawkcoin (TOM).

The US Securities and Exchange Commission (SEC) announced on Tuesday it had secured prohibitions against the founder of Tomahawk Exploration — a company which attempted to raise money issuing a Tomahawkcoin (TOM) in an allegedly fraudulent initial coin offering (ICO).

Tomahawk launched its ICO in 2017, seeking $5 million to ostensibly fund the cost of drilling oil wells in California. The offering failed to raise any money but the company used a “bounty program” to issue tokens in return for online promotional services.

The SEC alleges that Tomahawk and its founder David Laurance used misleading marketing materials and false claims about having oil drilling licenses on top of providing inflated output projections. The purported fraud also included a false promise that “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.” Further, the materials presented Laurance as a person with a “flawless background” although he was previously convicted of participation in fraudulent securities offerings.

The agency has imposed a lifetime officer-director bar, a lifetime penny stock bar, and an injunction on Laurance and his venture. He has neither admitted nor denied the allegations, but he and the company have agreed to the imposed bars and consented to pay a $30,000 fine.

“Investors should be alert to the risk of old-school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs,” warned Robert Cohen, head of the SEC Cyber Unit.

The regulator also issued an investor alert on Tuesday, encouraging investors to check the background of anyone selling or offering them an investment. The watchdog recommended getting familiar with its Investor Bulletin about ICOs, which describes “potential warning signs of investment fraud including “guaranteed” high investment returns and unlicensed sellers.”

US regulators have been stepping up their efforts to protect investors from fraudulent ICOs. In recent months, the SEC has issued a number of warnings, subpoenaed cryptocurrency companies, and halted suspicious offerings of new digital coins.