SEC Charges Blockchain Marketplace Opporty Over 'Fraudulent' $600,000 ICO

The firm is alleged to have conducted a fraudulent and unregistered sale of digital assets called OPP Tokens, raising around $600,000.

AccessTimeIconJan 22, 2020 at 10:52 a.m. UTC
Updated Sep 13, 2021 at 12:10 p.m. UTC
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The U.S. Securities and Exchange Commission (SEC) is taking action against yet another ICO issuer: blockchain-based B2B marketplace Opporty.

In a complaint filed on Tuesday, the SEC alleges that, from September 2017 to October 2018, Opporty International, Inc. and its founder and sole owner Sergii Grybniak conducted a "fraudulent" sale of digital assets called OPP Tokens, raising around $600,000 from roughly 200 investors in the U.S. and elsewhere.

However, the defendants did not register the tokens with the regulator, which alleges the initial coin offering constituted a securities offering.

Further, the SEC states Grybniak and his company misled investors over the sale, "making material misrepresentations and omissions to investors and engaging in other deceptive conduct during the offering."

For example, Oppty is alleged to have falsely touted the platform as already having as many as over 6,000 "verified providers" ready to use the platform. "In fact, the overwhelming majority of these purported 'verified providers' had expressed no such willingness and were not contributing content to Opporty's platform," according to the complaint.

Opporty also allegedly claimed to have 17 million small U.S. businesses in its catalog, suggesting to investors that all these firms were genuine businesses eligible to do business on the platform. However, the SEC states, the firm had merely bought a database of entity and individual profiles. This was not disclosed to investors in the token, alleges the complaint.

Had the firm registered the sale with the SEC, it would have meant investors could have been provided "sufficient, accurate information relating to the ICO," the regulator says.

Oppty's tokens were sold via purchase agreements called "simple agreements for future tokens" (SAFTs) – a framework once touted as being a way to avoid such regulatory actions. As such, they "constituted investment contracts and, thus, securities," the SEC says.

The complaint indicates the SEC seeks to have the defendants return the "ill-gotten gains" from the ICO, refrain from future issuances of securities and pay civil penalties. Also, New York resident Grybniak would be barred from acting as director of a public company if the SEC wins its arguments.

The SEC suggests the Eastern District of New York would be the appropriate court venue for the case to be heard.


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