Blue Sky: New Jersey Sues Issuer of Unregistered Tokens
The SEC’s high-profile enforcement actions involving digital assets get most of the limelight, but as we’ve previously blogged, state securities regulators have been extremely active on the enforcement front when it comes to token deals. Last week, it was New Jersey’s turn to bring the hammer down. Here’s an excerpt from a “Modern Consensus” article describing the Garden State’s recent action:
“New Jersey got in on the cryptocurrency offering enforcement action on July 18, suing blockchain-based online rental marketplace Pocketinns for an unregistered sale of securities last year. The state’s attorney general, Gurbir Grewal, was joined by the New Jersey Bureau of Securities today in announcing a three-count enforcement action against Princeton-based Pocketinns and its president, Sarvajnya Mada, over the January 15-31, 2018, sale of $410,000 in PINNS Tokens in an initial token offering.
The U.S. Securities and Exchange Commission (SEC) has brought several similar suits, initiating a high-profile action against blockchain instant messaging service Kik in June for its $100 million ICO in 2017. The agency released a long-awaited “plain English” guide defining when an ICO is a security in April.
Aside from violating the Garden State’s Uniform Securities Law by failing to register the offering, Grewal alleged that Mada acted as an unregistered agent and Pocketinns employed an unregistered agent during the sale.”
The article says that the Pocketinns deal wasn’t very successful – it raised less than 1% of the $46 million it sought. But on the other hand, the company appears to have been extremely successful in buying itself all sorts of trouble.
-John Jenkins, TheCorporateCounsel.net July 24,2019
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