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Cease and desist order issued or Denver based healthcare ICO

With the initial coin offering (ICO) sector first coming to prominence in 2017, a lot of people were not too sure what the best way to navigate the sector would be. It was a steep learning curve for all parties, particularly the regulatory authorities. They were largely taken by surprise at the sudden growth in popularity of the sector and as a result they had little to no regulations in the works.

Cease and desist order issued or Denver based healthcare ICO August 6, 2018Leave a comment

With the initial coin offering (ICO) sector first coming to prominence in 2017, a lot of people were not too sure what the best way to navigate the sector would be. It was a steep learning curve for all parties, particularly the regulatory authorities. They were largely taken by surprise at the sudden growth in popularity of the sector and as a result they had little to no regulations in the works.

This led to a lot of fraudsters entering into the sector. They saw a lucrative opportunity because there was so much money, flowing into the sector at the same time as there was little to no governance or oversight in place. Thankfully, the authorities are now finally starting to catch-up. The latest part of this action has been the cease and desist order that has been issued against a Denver based ICO.

What are the details about this cease and desist order?

It was announced by Gerald Rome, the Securities Commissioner in Colorado that this cease and desist order was issued against the Linda Healthcare Corporation that is based in Florida. The ICO has as a result been paused by the founder because their token has been deemed to be an unregistered security.

This case began back in April when the Department of Regulatory Agencies Division of Securities in Colorado was informed about the actions of this company. The LNDA token had been advertised as being able to be used to purchase their insurance product.

There were not adequate warnings provided for investors to say that this investment offering is in fact a security. This was ignored and the necessary security laws were not followed, which ultimately ended in this cease and desist order being issued.

The company was defending its actions by saying that it was in fact a crowdfunding campaign and not an ICO. However, Judge Norwood found that it was in fact an investment contract due to what was seen in their whitepaper and through their website.

The token met the test on whether something is a security or not because it is a contract whereby a person invests their money, it involves a common enterprise and this investment product is expected to provide profits for a 3rd party.

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