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The New Jersey Bureau of Securities and Attorney General Gurbir S. Grewal accused a Princeton-based blockchain-driven company of offering and selling unregistered securities.
According to a filed complaint, Pocketinns, Inc. and its president, Sarvajnya G. Mada reportedly sold $410,000 worth of unregistered securities in the form of a cryptocurrency called “PINNS Tokens” to gather funds to establish a blockchain-driven online marketplace.
The offenders reportedly sold the tokens to 217 investors via an initial token offering conducted from January 15 to 31, 2018. The firm told investors that the PINN Tokens can be utilized via an online ecosystem that was still under construction.
The state also accused that Mada was acting as an unregistered agent and that the firm employed an unregistered agent, violating the New Jersey’s Uniform Securities Law.
Mada and his firm allegedly tried to secure $46 million by selling 30 million PINNS Tokens in exchange for Ether. Currently, one Ether is valued at $280, but at the time of sale, the price was at $728.
The lawsuit revealed that the defendants sold the PINNS Tokens pursuant to a federal registration exemption that required all buyers to be verified as accredited investors who met certain net worth.
However, Pocketinns and Mada failed to take reasonable steps to ensure their investors were accredited. In fact, only 11 of the 217 investors were able to provide documentation to prove their accredited investor status. That being said, the offering’s exemption is inapplicable, thus requiring the PINNS Tokens to be registered with the state Bureau of Securities.
The litigation also seeks to prohibit Pocketinns and Mada from selling securities in New Jersey, impose civil monetary penalties for violating the state’s Uniform Securities Law, and compensate the investors who participated in the offering.
Meanwhile, the U.S. Department of Justice is pursuing the extradition of Roger Nils-Jonas Karlsson, after his firm Easter Metal Securities and associates were charged with crimes related to fraud involving cryptocurrency.
