Even though HempCoin (CRYPTO:THC) was one of the first 30 cryptocurrencies in the world, it is also on its way to being the first cryptocurrencies in the world to get shut down by the Financial Industry Regulatory Authority, a.k.a. FINRA.
A few weeks ago, the Financial Industry Regulatory Authority issued its first crypto-related disciplinary action, charging Timothy Tilton Ayre, a broker in Agawam, Massachusetts, with securities fraud and the unlawful distribution of an unregistered cryptocurrency security, HempCoin.
This case goes further than just cryptos, though.
Rocky Mountain Ayre, Inc.
According to FINRA’s complaint, Timothy Ayre was also the President and Director of Rocky Mountain Ayre, Inc. (OTC:RMTN), and also the “sole individual responsible for the company’s public disclosures.”
As you can see on the OTC Markets website, RMTN is labeled Caveat Emptor, a.k.a. buyer beware, and has been labeled with a “skull and crossbones icon next to the stock symbol to inform investors that there may be reason to exercise additional caution and perform thorough due diligence before making an investment decision in that security.”
OTC Markets is absolutely right. There are a handful of reasons to exercise additional caution.
The Connection Between RMTN and HempCoin
FINRA alleges that from early 2013 through mid-2016, “Timothy Ayre attempted to attract public investment in his worthless public company, Rocky Mountain Ayre,” by “creating, offering, and selling unregistered cryptocurrency securities to the public” that he marketed as “the first minable coin backed by marketable securities.”
The complaint continues to note that Ayre defrauded investors by falsely stating the nature of RMTN’s business in “nearly every Pink Market disclosure it made.”
Additionally, Ayre failed to disclose the terms of a “material transaction” regarding RMTN’s creation of a cryptocurrency security that was backed by 500 million newly-issued shares of RMTN common stock.
Last but not least, “Ayre was responsible for multiple false assertions in RMTN’s financial statements regarding its cash and the value of its assets.”
Because of all of this, Ayre violated a long list of regulations including Section 10(b) of the Securities Exchange Act of 1934, FINRA Rule 2020, the Securities Act of 1933, and thereby FINRA Rule 2010.
How Did this Happen?
In 2015, Rocky Mountain Ayre, Inc. acquired the rights to HempCoin and repackaged it as a security to launch to the public.
RMTN issued and reserved 500,000,000 shares of its common stock for the “sole purpose of supporting the maximum number of coins offered to the public.”
Then, Ayre marketed HempCoin as “the world’s first cryptocurrency to represent equity ownership” in a publicly traded company, representing that each HempCoin was equivalent to 1/10th of a share of RMTN common stock.
When Ayre offered and distributed HempCoin to the public at the beginning of 2016, he hoped that this creative structure would lead to a correlation between HempCoin and RMTN. Essentially, if the value of HempCoin went up, Ayre was hoping for a corresponding rise in the value of “his otherwise worthless company.”
That obviously didn’t come to fruition for Ayre as RMTN currently has a market capitalization of approximately $57,499, compared to HempCoin’s market capitalization of roughly 984 BTC or $6,417,352 USD.
HempCoin Still Active
Despite these charges, the HempCoin Twitter account is still active, posting as recently as today.
“Canada starts legal marijuana sales and becomes world’s largest national pot marketplace. Only a matter of time for crypto to be adopted as the main currency,” read the most recent tweet.
HempCoin $THC congratulates Canada 🇨🇦
Canada starts legal marijuana sales and becomes world’s largest national pot marketplace.
Only a matter of time for crypto to be adopted as the main currencyhttps://t.co/qr3wSIhNJe
— Hemp Coin (THC) (@TheHempCoin) October 17, 2018
Beyond just the HempCoin Twitter account, HempCoin itself is still trading, up over 5% on Canadian legalization news.
We’ll be watching the situation closely. In the meantime, be sure to subscribe to Cannabis Stock Updates here so you never miss an important update.
Get Real-Time Updates from MJobserver.com