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HomeAltcoin NewsSEC Brings the Banhammer Down on Tomahawkcoin ICO Founder Over Fraud Allegations

SEC Brings the Banhammer Down on Tomahawkcoin ICO Founder Over Fraud Allegations


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Earlier Tuesday, the U.S. Securities and Exchange Commission announced that it had obtained permanent officer-and-director and penny stock bans against Tomahawk Exploration founder, David T. Laurance, who has also been accused of violating federal securities laws in connection with the fraudulent Tomahawkcoin ICO.

According to the order, the Tomahawkcoin ICO, which was launched in July 2017, was seeking to raise $5 million, purportedly to fund the cost of drilling 10 oil wells in California. Specifically, the SEC alleges that the company’s principals – including Laurance – mislead investors by fraudulently claiming to possess leases for several drilling sites as well as using inflated oil production estimates that were contradicted by the company’s own internal analysis.

The now-defunct ICO’s whitepaper strongly implies that Tomahawk Exploration, LLC would be a publicly traded company within 18 months and that, as the SEC notes:

…token owners would be able to convert the Tomahawkcoins into equity and potentially profit from the anticipated oil production and secondary trading of the tokens.

Fortunately for would-be investors, the Tomahawkcoin ICO failed to raise any money, however, TOM tokens were distributed in exchange for professional services through the ICO’s bounty campaign. The tokens, according to the SEC, are considered unregistered securities since they represented “a transferable share or option on a security.”

Tomahawk’s issuance of tokens under the bounty program constituted an offer and sale of securities because the company provided TOM to investors in exchange for services designed to advance Tomahawk’s economic interests and foster a trading market for its securities.

Laurance’s Not-So-Squeaky-Clean Past

Tomahawkcoin isn’t Laurance’s first brush with the SEC. Court records show that, in 1993, Laurance was charged with two counts of securities fraud, two counts of mail fraud, one count of “interstate transportation of money or property obtained by fraud,” and two counts of “engaging in monetary transactions in criminally derived property” in connection with a fraudulent penny stock scheme.

Laurance was sentenced to prison and, after his release in 1997, jumped into the oil and gas business – first with Eldorado Exploration, Inc., whose business entity status the State of Nevada permanently revoked, and then, last year, with Tomahawk Exploration LLC.

None of this was disclosed to potential investors, of course. Instead, Laurance referred to himself and his team as “refined successful citizens with flawless backgrounds, verifiable credentials, heroes, public activists, and skilled individuals with great experience in both business and digital currency” in the project’s promotional materials.

Tomahawk Gets the Banhammer

Tomahawk Gets the Banhammer

The SEC has determined that Laurance and Tomahawk Exploration LLC violated the registration and antifraud provisions of the federal securities laws. While Laurance has neither confirmed nor denied the findings, he has, nonetheless, consented to the cease and desist order and has agreed to pay a $30,000 fine. In addition, under the terms of the bans, Laurance can never again hold a position as either an officer or directory in any registered company. Furthermore, he is prohibited from participating in any penny stock offerings.j

Excuses and Passing the Buck

Speaking to The Recorder by phone earlier today, Laurance admitted that he has yet to see the order. Appearing to shrug off at least some of the responsibility, he claimed that he had no idea that the ICO was going to be promoted to the general crypto community and that the person working with him on the ICO promised him that it would only be promoted to “qualified investors.”

“This was not supposed to be for John Q. Public,” Laurant said. “I did not realize he had opened it up to the public.”

Laurant also seemed to blame his prior record as a convicted scammer for getting “swept up in this thing.”

His takeaway from the ordeal? “Look before you leap, I guess.”

Do you think the SEC made the right call? Let us know in the comments below.

Images courtesy of Shutterstock, Pixabay


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