FINRA brings charges against broker for cryptocurrency fraud
Investor protection agency, the Financial Industry Regulatory Authority (FINRA), brought fraud charges against broker Timothy Ayre for attempting to defraud investors in its first cryptocurrency-related disciplinary action.
FINRA announced on Wednesday it had filed a complaint against Ayre, who was charged with securities fraud and the unlawful distribution of an unregistered cryptocurrency security called HempCoin.
It was alleged that Ayre tried to entice public investment in what the agency called “a worthless public company, Rocky Mountain Ayre (RMTN) ” by issuing and selling HempCoin – which he publicised as “the first minable coin backed by marketable securities” from January 2013 through October 2016.
Ayre was said to make fraudulent, positive statements about RMTN’s business and finances and failed to disclose his creation and unlawful distribution of HempCoin which was never registered. RMTN was quoted on the Pink Market of OTC Markets Group and traded over the counter.
Ayre was also accused of defrauding investors through making multiple material false statements about the nature of the company during the period.
The complaint charges that in June 2015, Ayre bought the rights to HempCoin and repackaged it as a security backed by RMTN common stock. Ayre promoted HempCoin as “the world’s first currency to represent equity ownership” in a publicly traded company.
Investors were promised an equivalent to 0.10 shares of RMTN common stock for each coin. FINRA said investors mined more than 81 million HempCoin securities through late 2017 and bought and sold the security on two cryptocurrency exchanges C-Cex and Yobit.