Yet another US-based ICO is in legal trouble. Pocketinns, a project promising to “develop an online marketplace using blockchain technology, where consumers would be able to use and spend the PINNS Tokens” has allegedly sold approximately $410,000 worth of unregistered securities to 217 investors, violating state law.
The civil action complaint has listed not just the company, but also its CEO as а defendant. The plaintiffs state that the project failed to take advantage of the state exemption that allows token offerings if the newly created asset is only sold to verified accredited investors.
Instead, only 11 investors provided proper documentation, which did not dissuade the project from moving on with the sale. Pocketinns president and CEO Sarvajnya G. Mada has allegedly admitted that “thirty to forty percent” of ICO participants never supplied any proof.
The New Jersey Bureau of Securities is seeking a refund for the investors, in addition to a monetary penalty for the defendants. This could prove difficult, as the plaintiffs are alleging that the Ethereum coins raised have already been spent.
If found guilty, Pocketinns and Mada will also be permanently barred from selling securities in the state of New Jersey.