Financial regulators in the United States are now taking steps to ensure that firms engaged in cryptocurrency-related activities operate within the confines of the law. In a recent move, the Financial Industry Regulatory Authority (FINRA) is accusing Rocky Mountain Ayre President Timothy Tilton Ayre of selling unregistered securities in connection with the company’s sale of HempCoin cryptos.
Accused of Repackaging HempCoin as Securities
Financial Industry Regulatory Authority is charging Timothy Ayre with securities fraud and unlawful distribution of unregistered securities, according to TechCrunch. Ayre is listed as the president, CFO, secretary, treasurer and director of Rocky Mountain Ayre, Inc. (RMTN), a Delaware-based holding company that partnered with Tahionic Soft SRL to put up BitLocation, a company that offers retail businesses a means to trade cryptos and become cryptocurrency locations, according to data from The Wall Street Journal.
FINRA accused Ayre of trying to entice the public from Jan. 2013 to Oct. 2016 to invest in his company, Rocky Mountain Ayre, by purchasing HempCoin, which Ayre claimed as “the first minable coin backed by marketable securities,” according to a Yahoo Finance article. FINRA said that after Ayre purchased the coin’s rights in June 2015, he “repackaged it as a security that was backed by RMTN as a common stock.” Ayre was also reported as having given his assurance that each HempCoin is equivalent to 0.10 shares of RMTN common stock.
Reuters reported that Ayre is prepared to fight FINRA’s allegations, according to Franklin Ogele, a lawyer who represents Ayre in the case. Ogele argued that it is even unclear if HempCoin can be considered a security.
The status of cryptocurrencies in the US is filled with uncertainty. According to the report, Securities and Exchange Commission (SEC) Chair Jay Clayton previously said that most initial coin offerings should be considered as securities. However, SEC failed to specify if a cryptocurrency has been considered a security and which have not.