The Securities and Exchange Commission (SEC) has charged blockchain-based B2B marketplace Opporty for conducting a “fraudulent” sale of digital assets, the U.S. regulator said in a press release on 21 January.
According to the Tuesday complaint, the company and its founder and sole owner Sergii Grybniak sold the so called OPP Tokens from September 2017 to October 2018, raising $600,000 from approximately 200 investors, some of whom were located in the U.S. The tokens were sold through a “simple agreements for future tokens” (SAFT), which according to the SEC “constituted investment contracts and, thus, securities”.
The Opporty project was allegedly created with the goal of providing a “blockchain-based ecosystem for small businesses and their customers”. The aim was to create a place where small businesses could list their services, and enter into an agreement through smart contracts.
Although the SEC’s primary charge is for conducting an unregistered securities offering, as the token had not been registered with the regulator, the document further claims that Grybniak and his company misled investors by “making material misrepresentations and omissions”.
According to the complaint, the company allegedly claimed to have on-boarded as many as over 6,000 “verified providers” ready to use the platform, while in fact “the overwhelming majority of these purported ‘verified providers’ had expressed no such willingness”.
The claim that the firm had more than 17 million small U.S. businesses in its database also turned out to be false. The SEC stated that the firm had merely purchased a database of entity and individual profiles, which it did not disclose to its investors.
As indicated by the complaint, the SEC is looking to have all proceeds from the ICO returned to investors, and barr Grybniak from future issuance of securities. The SEC also wishes to have the defendant refrain from acting as a director of a public company, and pay civil penalties.