ICO Issuer charged by SEC

The Securities and Exchange Commission has announced settled charges against Loci Inc. and its CEO John Wise for making materially false and misleading statements in connection with an unregistered offer and sale of digital asset securities in an Initial Coin Offering (ICO).

According to the SEC's order—

• Loci provided an intellectual property search service for inventors and others users through its software platform called InnVenn.
• From August 2017 through January 2018, Loci and Wise raised $7.6 million from investors by offering and selling digital tokens called “LOCIcoin.”
• In promoting the ICO, Loci and Wise made numerous materially false statements to investors and potential investors, including false statements concerning the company’s revenues, number of employees, and InnVenn’s user base.
• Wise misused $38,163 in investor proceeds to pay his personal expenses.
• Although LOCIcoins constituted securities, Loci’s offering was not registered with the SEC and no exemption from registration applied.

The SEC’s order imposes a $7.6 million civil penalty against Loci, and an officer and director bar as to Wise. Loci and Wise must destroy their remaining tokens, request the removal of the tokens from trading platforms, publish the SEC's order on Loci's social media channels, and refrain from participating in future digital asset securities offerings.