According to a press release, the Financial Industry Regulatory Authority (FINRA) has charged a Massachusetts resident, Timothy Tilton Ayre with securities fraud and unlawful distribution of an unregistered sale of a cryptocurrency called HempCoin. This is the first time that the self regulatory body has taken a stern disciplinary action against an entity related to crypto fraud.
The complaint alleges that Timothy Ayre sold unregistered securities in the form of the HempCoin token which he publicized as “the first mineable coin backed by marketing securities.” It was said to represent an investment in his “worthless” company, Rocky Mountain Ayre (RMTN). FINRA announced the charges on Tuesday, adding that it has filed a legal complaint against Ayre for misleading investors as well.
Ayre also contended that HempCoin was “the world’s first currency to represent equity ownership.” However, the token was never registered as a security and Ayre failed to apply for an exemption, according to FINRA.
First disciplinary action by FINRA
According to the complaint, FINRA also alleges that Ayre bought the rights to HempCoin in June 2015 and repackaged it as a security backed by RMTN common stock. Ayre marketed HempCoin as “the world’s first currency to represent equity ownership” in a publicly traded company and promised investors that each coin was equivalent to 0.10 shares of RMTN common stock. Investors mined more than 81 million HempCoin securities through late 2017 and bought and sold the security on two cryptocurrency exchanges.
“In addition, FINRA alleges that, from January 2013 through October 2016, Ayre defrauded investors in RMTN by making materially false statements and omissions regarding the nature of RMTN’s business, failing to disclose his creation and unlawful distribution of HempCoin, and making multiple false and misleading statements in RMTN’s financial statements,” FINRA added in its statement.
Ayre has got the chance to defend himself in front of a disciplinary panel if he chooses to respond to the claims. If he is found guilty, there are chances that he may be suspended or permanently barred from the securities industry. He might as well as forced to pay recompensation for the damages.
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