The U.S. Securities and Exchange Commission announced Aug. 14 that it had fined David T. Laurance $30,000 and permanently banned him from being an officer or director of any public company and from participating in penny stock offerings after the agency found he had perpetrated an initial coin offering fraud.
According to the SEC's order, David T. Laurance and Tomahawk Exploration LLC sought to raise money to fund oil exploration in California through the sale of blockchain-based digital tokens called "Tomahawkcoins."
During its investigation, the SEC found both Laurance and Tomahawk had violated the registration and anti-fraud provisions of federal securities laws.
The SEC said Laurance's promotional materials for the offering inflated projections of oil production that contradicted the firms own analysis and suggested the firm possessed leases that it had not obtained.
Additionally, the materials did not disclose prior criminal convictions for Laurance's role in prior fraudulent securities offerings, but instead described Laurance as having a "flawless background."
The SEC noted the initial coin offering failed to raise money, but said Tomahawk issued tokens in exchange for online promotional services.
Without admitting or denying the SEC's findings, both Laurance and Tomahawk consented to a cease-and-desist order, while Laurance consented to the fine, as well as the officer-and-director bar and the penny stock bar.
Robert Cohen, chief of the SEC's cyber unit, said the fraud was a new twist on an old trick.
"Investors should be alert to the risk of old-school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs," he said.