FINRA Files First Cryptocurrency Disciplinary Action

The Financial Industry Regulatory Authority (FINRA) has issued its first cryptocurrency-related disciplinary action, charging Timothy Tilton Ayre, a broker in Agawam, MA., with securities fraud and the unlawful distribution of HempCoin, which the agency claims is an unregistered cryptocurrency security.

The complaint filed Tuesday alleges Mr. Ayre, from January 2013 through October 2016, issued and sold HempCoin to lure public investment into Rocky Mountain Ayre, which Finra described as “his worthless public company.” The company was quoted on the Pink Market of OTC Markets Group and traded over the counter under the ticker RMTN.

In June 2015, RMTN acquired the right to a cryptocurrency, HempCoin, and repackaged it into a security to launch to the public. RMTN issued and reserved 500 million shares on common stock for the sole purpose of supporting the maximum number of coins offered to the public. Ayre marketed HempCoin as “the world’s first currency to represent equity ownership” in a publicly traded company and represented that each coin was equivalent to 0.10 shares of RMTN common stock.

According to FINRA, no registration statement for the HempCpoin securities was ever filed with the SEC and no sales were exempt from registration. Investors mined more than 81 million HempCoin through late 2017 and bought/sold the security on two cryptocurrency exchanges.

This disciplinary action draws attention to two areas of popular fraudulent investment – marijuana and cryptocurrency. Not surprisingly, FINRA has recently issued an investor alert on cryptocurrency-related stock scams, while the SEC recently released its own investor alert on fraudulent marijuana investments.

To learn more, read the complete FINRA press release.