SEC Charges ICO That Claimed SEC Compliance

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An ICO that raised $600,000 in 2018 may have to forfeit all that and more as a result of charges brought by the SEC. Called Opporty, the ICO was allegedly built on several false premises, including a directory of millions of businesses that was apparently just something the firm had purchased and integrated.

An Array of Services

Opporty purported to be a boon to small businesses looking to get into blockchain. The website, which is still live, says the company “offers an array of services for B2B and B2C commerce.”

The SEC said in a press release:

As alleged in the SEC’s complaint, Sergii “Sergey” Grybniak and his company Opporty International, Inc. raised approximately $600,000 from nearly 200 investors in an ICO of Opporty’s unregistered digital asset securities called “OPP Tokens.” Grybniak and Opporty allegedly made multiple false and misleading statements to investors, including exaggerating the number of actual and potential users of its business platform and falsely claiming that the ICO was “SEC regulated,” “SEC compliant,” and “SEC registered.”

The SEC had previously said it was going to be lenient on crypto firms in 2020, but so far we haven’t seen it. Earlier this month, the agency issued a staunch warning about Initial Exchange Offerings, which are a new form of ICO.

The bulk of the SEC’s complaint against Opporty doesn’t hinge on whether or not investors are happy, or even whether or not they made money. Instead, investigators focus on the use of misleading statements, especially those that falsely claimed the ICO was regulated by the federal government in the form of the SEC.

Getting On SEC Radar

This was a particularly foolish move. Avoiding it, given the size of the ICO, might have avoided problems for a lot longer. The government would prefer to go after especially heinous criminals first, but saying that the ICO was regulated by the same agency that could prosecute you is a good way to get on that list.

SEC compliance for ICOs was remarkably limited, with very few ever passing the muster or even trying. For the most part, ICOs found a way to operate in ways that didn’t violate laws and also didn’t require any form of rubber stamp approval from the government.

Agencies like the SEC prefer when things are confusing, as it affords them the most opportunities to pounce on projects that may be operating in a gray area.

Opporty founder Sergii Grybniak was personally charged by the government, and it’s unclear how much prison time he might be looking at. The press release from the SEC makes it seem like he might not be looking at any. Nevertheless, the government has a history of jailing people just for being associated with cryptocurrencies, and especially fraudsters who were involved with them.

The SEC also argues that Grybniak and Opporty lied about a partnership with a major software company that was never to be forthcoming.

The SEC is largely looking to ban Grybniak from dealing in securities in the future, writing in the press release:

The SEC seeks permanent injunctions, conduct-based injunctions prohibiting the offering of digital or other securities, disgorgement plus interest, and civil penalties against Grybniak and Opporty, as well as an officer-and-director bar against Grybniak. The complaint also names Clever Solution Inc., another entity controlled by Grybniak, as a relief defendant.

So far, Grybniak might consider himself lucky.

What the future of the SEC and crypto will be, only time can tell. Will this be the year of constant prosecution?