The Philippines financial watchdog the Securities and Exchange Commission (SEC) issued a public warning against a local firm which is selling securities tokens without the necessary permit.
In an advisory, the SEC noted that Freedom Traders Club is conducting seminars and training to promote its cryptocurrency Ploutos Coin in Visayas and Mindanao and marketing the coin as an investment vehicle where token holders can profit by simply by holding them.
“The primary consideration for the purchase of Ploutos Coins is the potential to earn profits as a result of its projected growth in market value. It was marketed by its issuer, brokers and salesmen as a cryptocurrency similar to bitcoin whose value will dramatically increase over time. This marketing pitch led the public to purchase the said coin with the expectation that they will earn profits from the price appreciation,” the SEC said.
The SEC reminded Freedom Traders of the earlier advisory it issued on January 8 this year about initial coin offerings and warning that “some of these new cryptocurrencies or digital coins, based on the facts and circumstances surrounding their issuance, follow the nature of a security as defined by Section 3.1 of the Securities Regulation Code.”
It added that anybody who invites or recruits people to invest or join in unregistered investment contracts or securities could face criminal charges or penalized under existing Philippine laws.
The watchdog said the Ploutos Coin is considered an investment contract under the Securities Regulation Code because there is an investment of money involved, there is a common enterprise that sells the coin, coin holders are expecting to gain profits, and profits arrive primarily from the efforts of others, not the holder.
According to the agency, it issued a similar warning in May this year against Coin-Option.com for enticing its visitors to invest in cryptocurrencies. The SEC classified Coin-Caption.com as an Internet-based Ponzi scheme because it promises considerable earnings in short periods and uses a binary network (upline and downline) to earn commissions or profits.
“Undoubtedly, the Ploutos Coins are security tokens and its sale and offer constitute a sale or offer of an investment contract within the purview of the te[G13] rm ‘securities’ as defined by law,” the SEC added.
It advised Freedom Traders to register with the SEC as a securities traders and secure the appropriate license and/or permit to sell securities to the public.
The watchdog said that if Freedom Traders or its representatives fail to comply with the law, they could face a fine of nearly $94,000 or 21 years imprisonment or both.
This article appeared first on Cryptovest
