The SEC has partially won a blockchain company’s ICO with a chance of more than $600,000
The United States Securities and Exchange Commission has awarded a partial victory against blockchain firm Oporto International and its owner – alleging they conducted a fraudulent initial coin offering (ICO).
In a memo dated September 24, US District Judge Eric Comity found sufficient evidence to support the SEC's claim that Oporto and his wife, Sergey Gribnik, illegally offered to sell unregistered securities in the US.
A US judge handed the SEC a partial victory. Source: US Courts
The SEC first announced in January 2021 that it was taking legal action against Oporti and Gribniak, accusing the company of conducting a fraudulent ICO by offering the sale of “unregistered digital asset securities.”
The Justice Committee said that the “OPP” tokens sold by Oporti and Gribnik in the ICO under the Howey test were investment contracts within the federal securities laws and should be registered by the regulator.
In addition, the SEC announced that the pre-sale of the Opportunity and Gribnik ICOs in 2018 He argued that it violated Section 5 of the Securities Act of 1933, which deals with the registration and distribution of securities.
Throughout the legal process, Gribnik said the token sale did not need to be registered because it was conducted under Reg D/S exemptions – which can be applied when transactions do not involve any public offering, and the buyers are accredited investors or the sale occurs outside the United States.
Judge Grybniak argued that a reasonable defense to the SEC's Section 5 claim was that the SEC's guidance on crypto offerings was “so vague and arbitrary that investors did not receive sufficiently specific warning of how the Hawaii test would apply.”
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But Judge Comity agreed with the SEC that Gribnik and Oporti did not meet the exemption requirements of Regulation S because they “unquestionably engaged in “direct sales efforts” in the United States.”
In the year Opportunity's ICO took place between September 2017 and October 2018 and raised $600,000 from 200 investors in the US and abroad. The SEC said it violated its rules by not registering the sale.
Oporti has marketed itself primarily in the United States as a “blockchain-based ecosystem for small businesses and their customers. The platform was intended to be a place where small businesses could list their services and enter into agreements through smart contracts.
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