Crowdfunding in the United States is a most dangerous game. Massachusetts brought no fewer than five acts of censure on the same day this week. Censure is a formal legal settlement entered into, in this case, with crypto companies accused of financial law violations, and usually involve a Consent Order (to prevent further prosecution, individual steps of compliance are mandated). Purported new ways to view television, money for cancer victims, kids entertainment, small-investor pooling, and even a different take on finding freelance workers were impacted.
Massachusetts Slams Five Crypto Companies on the Same Day
Across Platforms, Sparkco, Pink Ribbon, Mattervest, and 18 Moons were all issued formal Consent Orders this week, outlining their missteps and remedies they must take to avoid further prosecution. The near half dozen orders came from Massachusetts’ Secretary of the Commonwealth, William Gavin. Mr. Gavin, readers might recall, is on record at the height of last year’s bitcoin price run-up, likening the digital asset to a “craze” and “disaster.” And as far back as 2014, the state has been particularly unwelcoming to the currency’s future — its Office of Consumer Affairs and Business Regulation issued a public warning when just the second bitcoin ATM in the region was announced.
Across Platforms, also known as Clickable TV, is an analytics and social television company. They’ve been in business for nearly a decade. It attempted to launch “an [initial coin offering] ICO backed by an innovative advertising platform built on blockchain technology. Unlike traditional cable TV advertising, the Clickable TV platform will turn commercials on certain mediums into clickable ads where the viewer can purchase products using Clickable TV tokens. Clickable TV enables viewers to spend their ICO tokens or hold them for future use and at any time sell them on an exchange for fiat currencies,” a press release bragged, beginning with a pre-sale last month. They were issued a subpoena in violation of state securities law, as they failed to register. The state’s view, as is the federal government’s, is that any ICO offering a token which can be traded as an investment is a security.
Across Platforms agreed to return investors’ money and cease the project immediately. 18 Moons looked to an ICO as well, “which will expand content development and distribution opportunities through our Planet Kids platform. Our token crowdsale will bring instant utility to both the creative community as well as our end consumers, parents and kids, who will benefit from the ever-changing universe of global, local and original content that will be unlocked through the use of our tokens, Planet Kids Coins (PKC),” the company explained. Basically, kids’ television with a crypto twist. Even the Boston Globe gave them some love earlier this year. To no avail, as the company’s ICO was an unregistered security. It too had a Consent Order issued and similar restrictions placed upon its funding scheme.
Mattervest were listed on Crunchbase as a company that finds “and analyzes crowdfunding deals.” According to their Consent Order, they committed the unpardonable sin of maintaining a website listing ICOs “to enable people who wanted to purchase cryptocurrency to pool their resources to enable them to participate in offerings or achieve bonuses that would otherwise not be available to the smaller purchaser.” They were essentially selling unregistered securities, and have completely ceased operations.
Pink Ribbon was organized by a single person with only a Facebook page, pledging an ICO “to support women and families facing financial burdens from cancer.” He essentially wanted to create 26 million coins, keep 8 million, hand over another 8 to families in need, and then divide the other 10 million evenly between mining and investors. The agency sent him a letter, and he responded by affirming he’d delete the page. But the agency asserts he never made good on his promise, and issued him the requisite Consent Order. It has since been deleted.
Finally, Sparkco, also known as Librium, initiated a hybrid software as a service licensing marketplace and freelance platform. According to the company, “Librium provides an on demand, digital workforce for businesses. As a hybrid between a SaaS marketplace and a freelance platform, Librium connects markets of oversupply to markets of undersupply. Librium empowers digital businesses, service providers, and workers.” It created its own ecosystem, including an ICO complete with its own tokens. After censure, the company continued with its plans, but excluded participants from the United States as a result.