Allegations Against Pocketinns, Inc.
The State of New Jersey has taken action against Pocketinns, Inc. and its president Sarvajnya G. Mada, claiming they offered over $410,000 worth of unregistered securities packaged as the glamorous PINNS Tokens during a buzz-heavy initial token offering (ITO) back in January 2018. While most people were still trying to figure out what a ‘blockchain’ was, Pocketinns was cashing in without the necessary paperwork.
Breaking Down the Legal Complaint
The legal complaint filed on July 17 drops the hammer on the defendants for allegedly selling tokens to a whopping 217 investors, yet only 11 could show they were accredited. With dreams of raising up to $46 million by selling 30 million tokens, it looks like they were as optimistic as a kid waiting for the ice cream truck, but reality hit like a ton of bricks.
The Risks of Unregistered Securities
Investing in unregistered securities is akin to walking through a minefield while blindfolded. Paul Rodríguez, the acting director of the Division of Consumer Affairs, raised a valid point: without verifying the investor credentials, how can anyone sleep soundly at night? He’s quoted saying, “By failing to take reasonable steps to verify that purchasers were accredited investors… the defendants violated the law and exposed investors to financial losses that could have been devastating.” Talk about a red flag!
What’s Next for Pocketinns and Mada?
As the wheels of justice turn, the complaint aims to shut down Pocketinns and Mada from selling any securities in New Jersey moving forward. Additionally, the state is seeking civil penalties for every alleged infraction of its Securities Law. Investors still wet behind the ears from this offering might find hope in a restitution payment if the state has its way.
Similar Cases Across the Nation
Interestingly enough, New Jersey isn’t alone. Earlier this month, a Texas court ordered two defendants to pay $400,000 for allegedly running a fraudulent scheme to solicit Bitcoin. If there’s one lesson here, it’s that the cryptocurrency landscape is as perilous as it is promising. One moment you’re riding the crypto wave, and the next, you might find yourself crashing onto the shores of legal troubles.
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