The US Securities and Exchange Commission (SEC) accused two residents of the state of Nevada of illegally obtaining profits from the sale of securities of a company calling itself a "blockchain start-up".
According to the SEC statement released on Monday, lawyer T.J. Jesky and commercial affairs manager Mark Destefano, allegedly earned $ 1.4 million in 10 days, selling shares of the Hong Kong company UBI Blockchain Internet. Both accused in October 2017 received 72 thousand limited shares of this company and had to sell them at a strictly determined price - $ 3.7 per piece.
Jesky and Destefano sold the shares at a rate of 21 to almost 50 dollars - until the SEC in early January, according to a press release, did not freeze the sale of all shares of the company. The reason for the freeze was the unusual behavior of the stock price and questions to the reporting.
This case is a prime example of why the SEC has warned retail investors to be cautious before buying stock in companies that suddenly claim to have a blockchain business. This case involved both a trading suspension and people holding restricted shares who attempted to profit from the dramatic price increase with illegal stock sales that violated the registration statement.
Robert A. Cohen
Chief, SEC Enforcement Division’s Cyber Unit
According to the SEC, both defendants agreed to return 1.4 million dollars and pay a fine of $ 188,682, as well as follow court restrictions. However, none of them acknowledged and rejected the accusations of the department.
The SEC reported that assistance in investigating the incident was provided by the US Financial Services Authority (FINRA), the Mexican National Commission for Banks and Securities and the Panamanian Office for Stock Market Issues.