One of the interesting parts about cryptocurrencies is that there are so many in the market. Besides the more popular ones like Bitcoin, Ethereum and Litecoin, there are hundreds of other ones. The downside to the crypto industry being so large and vast is that many people want to go into the industry, often bypassing the proper channels in the process.
Besides pumping and dumping. Unregistered currencies are also a huge problem in the crypto industry.
This was the case with HempCoin, an unregistered cryptocurrency that was in operation but was recently taken down by FINRA.
Timothy Tilton Ayre has been charged for unlawful distribution of an unregistered currency.
The official press release regarding the issue says:
In the complaint, FINRA alleges that, from January 2013 through October 2016, Ayre attempted to lure public investment in his worthless public company, Rocky Mountain Ayre, Inc. (RMTN) by issuing and selling HempCoin – which he publicized as “the first minable coin backed by marketable securities” – and by making fraudulent, positive statements about RMTN’s business and finances. RMTN was quoted on the Pink Market of OTC Markets Group and traded over the counter.
According to the complaint, FINRA also alleges that in June 2015, Ayre bought the rights to HempCoin 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. FINRA charges Ayre with the unlawful distribution of an unregistered security because he never registered HempCoin and no exemption to registration applied.
A Significant Problem
Unregistered coins are a huge problem in the crypto world, particularly with beginners who do not yet know the ins and outs of the industry.
It is one of the things that make outsiders wary of cryptocurrency as it often leads to them losing money in the process and taints the reputation of cryptocurrency as a whole.
This is why the regulation of cryptocurrencies is so important, as well as the public prosecution of those involved.
FINRA is a non-profit organization that takes it upon itself to regulate the cryptocurrency agency and bringing down frauds such as in cases like this.