The former founder and CEO of adult entertainment marketplace Fantasy Market has been charged by the Securities and Exchange Commission (SEC) with “orchestrating a fraudulent initial coin offering (ICO).” Jonathan C. Lucas was in charge of Fantasy Market, an adult performance marketplace where users could control events using the platform’s FMT tokens, when it held its ICO in the second half of 2017, which the SEC now says was illegal.
“Materially False Statements”
The SEC alleges that Lucas raised approximately $63,000 in contributions from more than 100 investors through private investments and the ICO, using “materially false statements in a whitepaper and online to induce investors to participate in the ICO”. Lucas claimed, for example, that a “working-beta” version of the platform existed when one did not, a law that has caught out many ICOs since 2017.
The authority alleges that Lucas also “presented a fictitious management team, and misrepresented his own experience.” The complaint states that Lucas only returned the funds after a negative spotlight was shone on the project in the media following complaints from investors. Lucas also claimed to have raised over $2 million of the $15 million target.
Lucas Accepts Punishment
Without admitting or denying the accusations leveled against him, Lucas has already consented to the judgement in the case and the penalties imposed – a $15,000 civil penalty; a five-year officer and director bar; and a five-year injunction prohibiting him from participating in any unregistered offering of securities. Given that Lucas is not denying the complaint and has agreed to the recommended punitive action against him, the SEC can chalk this up as another win against fraudulent crypto projects.
The authority has been on something of a roll of late, racking up wins against dodgy crypto projects left right and center in 2019, most of whom choose to settle rather than become embroiled in a lengthy and costly battle. This is except for Kin, whose founder Ted Livingston yesterday continued his stand against the authorities in his battle for clarification on securities in the crypto world.