FINRA first filed a complaint with the court against a crypto broker in the case of fraud

FINRA first filed a complaint with the court against a crypto broker in the case of fraud

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The Financial Industry Regulatory Authority (FINRA) has accused Massachusetts resident Timothy Tilton Ayre of securities fraud – due to unregistered sale of tokens. FINRA puts forward such a charge for the first time, notes CoinDesk.

Eyre is said to have sold unregistered securities in the form of a HempCoin token, which served as an investment for him, according to a FINRA press release, to “useless” Rocky Mountain Ayre (RMTN). FINRA voiced its charges on Tuesday, noting that it also filed a complaint with Ayre in court for misleading investors.

According to the promo materials of the token, HempCoin was advertised as “the first coin mined by securing the securities traded on the market”. Ayre also insisted that HempCoin was “the first coin in the world to represent the ownership of capital shares.”

The token was not registered as a security, and Ayre, according to FINRA, did not apply an exemption to it, exempting this registration.

Ayre acquired the rights to HempCoin in June 2015. A FINRA press release says that during October 2017, investors mined and traded this token on two different crypto exchanges. In addition, the company’s ordinary shares were traded publicly in the OTC trading market.

“FINRA also states that Ayre mislead RMTN investors by making false statements and not spreading all the information about the essence of the RMTN business without notifying that it created and illegally distributed HempCoin from January 2013 to October 2016, and also making multiple false and misleading statements about the financial condition of RMTN”, – said in a press release of FINRA.

Ayre has the opportunity to defend himself before the disciplinary team if he decides to respond to these statements. If he is found guilty, he can get a fine, reprimand and ban (temporary or permanent) for activities in the securities industry. In addition, he may be required to compensate for the damage caused.

Although this is the first time that FINRA has opposed a cryptocurrency broker, in July of this year, service representatives have already stated that they will begin to collect data on such activities of their participants.

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