FINRA filed a complaint against a broker for allegedly making material misstatements in public filings and for unlawfully offering and selling unregistered cryptocurrency securities.
FINRA alleged that the broker acquired the rights to a cannabis industry-related cryptocurrency, "HempCoin" and "repackaged it into a security to launch to the public." The underlying public company, sold in the OTC markets, had no underlying business operations. According to the complaint, the respondent violated Exchange Act Section 10(b), Rule 10b-5(b) and FINRA Rule 2020 as a result of his material misrepresentations and omissions, as well as Securities Act Section 5 and FINRA Rule 2010 for unlawfully offering and selling unregistered securities.
According to the accompanying FINRA press release, this is the regulator's first disciplinary action involving cryptocurrencies. The action follows an investor alert issued last year by FINRA regarding cryptocurrency-related stock scams, and a request issued earlier this year encouraging member firms to notify FINRA if they engage in activities related to digital assets.
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