USA Herald Initiating Coverage on legal actions taken against ICOs (Initial Coin Offerings)

Centra Tech Co-founder Sohrab Sharma eight years prison sentence ICO scam

Over the past 2 years, investors in Initial Coin Offerings such as Kik have lost millions, perhaps even billions.   As what might go down as one of the largest scams in US history, the end of the line for many ICOs and their crytocurrency founders may be coming near.

The USA Herald is initiating coverage of the SEC lawsuit against Kik and will continue coverage of other ICOs such as Shipchain, where investors have taken to the internet to complain of lost funds.   In Shipchain’s case, the co-founder and Chief Compliance Officer, Aaron Kelly, is also on probation with the Arizona Bar.

Signup for the USA Herald exclusive Newsletter

According to sources, over the next 2-3 years there will be a series of government actions against ICOs by the Securities Exchange Commission.    The initial series of actions targeted a few of the outright ICO scams, however going forward the series of actions will increase and will include disgorgement of all proceeds and fines.   Also it is believed that the Department of Justice is involved and will bring actions forward as well.

The Federal government’s hammer is a big hammer that moves slow, but when it comes down it comes down hard.   Kik is currently experiencing the full weight of the SEC.

Of all places for an action to transpire, an ICO would want to avoid the Southern District of New York.    The United States District Court for the Southern District of New York (S.D.N.Y.), known informally as The Mother Court, is a federal district court that houses many of the brightest  legal minds in the world.

According to the Kik lawsuit, Kik CEO Ted Livingston held multiple “meetups” in NYC promoting the Kin ICO and subsequently raised capital from investors in NY.   This created a nexus to NY that gave S.D.N.Y. jurisdiction.

Are ICOs investments that should be classified as securities?

It appears that many individuals that raised money from their ICOs are strongly avoiding getting classified as selling an investment.   That being said, the SEC has made salient arguments for why ICOs should be classified as securities in the Kik case.

By way of example, in this sponsored CryptoGurus video, the Shipchain ICO is often referred to as an investment.

The sponsored video goes on to note that the “returns if Shipchain is successful could be very impressive.”  Then the video explains “Token sale details for those of you listening that want to invest in this” and gives potential “investors” direction of a soft cap and hard cap for the “raise” of money.

Previously Forbes took this article down about Shipchain that touted it as the “next biggest thing since the internet.”  It was discovered that the article was paid for but not properly disclosed to readers.

Would the SEC constitute this type of promotion of an ICO as a security?

The South Carolina Attorney General’s office previously took an action against Shipchain, however there were no South Carolina residents connected to the purchase of the ICO in South Carolina and therefore it is believed the AG office dropped the action due to no nexus to the state.

The South Carolina Attorney General went on to state in it’s order “It does not and should not be interpreted to waive any future causes of action which may be brought as a result of any securities activities of the Respondant (Shipchain), whether detailed in the Administrative Order to Cease & Desist or Not.

If you have a tip about an ICO or lost money, we want to hear from you.  Email us via Support AT

A spokesperson from the SEC declined comment on this story.