Tomahawk ICO Scam Founder Barred and Fined USD 30000 by SEC

Tomahawk ICO Scam Founder Barred and Fined USD 30,000 by SEC

News, Scams

Tomahawk ICO Scam Founder Barred and Fined USD 30000 by SECDavid T Lawrence, the man who attempted to raise money in a 2017 ICO scam, has been fined USD 30,000 by the SEC and handed a permanent ban for selling securities. The investors were offered a coin that could be converted to equity in oil exploration. The bans are permanent for a lifetime. Lawrence cannot own or trade penny stocks and cannot work as an officer or director in a public company.

How did the Tomahawk ICO scam work?

Tomahawk Exploration LLC sought to raise funds through a ‘Tomahawkcoin’. The token sale made use of misleading marketing tactics, in particular, the false claims about oil drilling licenses. Lawrence was described as a character of “flawless background” despite a prior criminal conviction for fraudulent security offerings. The marketing used by the ICO is clever. According to a Tomahawk ICO announcement

“ I invite you to picture a new professional brand of ICO. One where the costs have already been defined and the goal is to raise only the money needed to begin operations. An ICO where the business plan is available to read before investing and put together by a publicly accessible business team with verifiable credentials.”

“Within eighteen months after the completion of the ICO (and potentially sooner), Tomahawkcoin holders will be given the option of receiving gift shares.”

“The expected revenue for each of the ten oil wells based on the company’s investigations is $500,000.”

The ICO was not registered with the SEC, and Lawrence made many false claims with regards to his history, which included past criminal activity. The ICO scam made use of a bounty program where people are promised a commission in tokens for anyone who clicked on social posts. This is legal for affiliate marketing of digital products, but illegal for the sale of securities. It is a common scheme used by fraudulent ICOs.

Investors beware

After the release, the SEC’s Office of Investor Education and Advocacy (OEIA) issued an alert to encourage investors to use the simple search tool for further investigation on ICOs. According to Robert Cohen of the SEC cyber unit – “Investors should be alert to the risk of old-school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs.”

It should be noted that no ICOs registered with the SEC in 2017 when there was considerably more regulatory uncertainty surrounding their nature. All investors are warned to stay away from ICOs relating to oil and gas which are typically associated with classic Ponzi schemes. ICO scams are not a disadvantage of DLT. They are classic schemes using basic techniques which can be discovered with basic ICO research and some due diligence.

Tomahawkcoin received low ratings on ICObench, ICOrating, and ICOmarks. However, it did achieve a green checkmark on the Waves platform, which could indicate to investors that the ICO was legitimate. The ICO scam sought to raise USD 5 Million but was caught early by the SEC, unlike the majority of other fraudulent ICOs.

Digital Nomad with an interest in Zen and Blockchain technology.

Law graduate with 3 years experience as a consultant in the capital markets industry and 4 years experience freelancing on UpWork as a Creative Writer.

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