The Securities and Exchange Commission said Thursday it issued a cease-and-desist order to stop businessman Joseph Calata and his three companies from selling unregistered securities to the public in the form of Krops Tokens or KropCoins through an initial coin offering.
An ICO is a fund-raising activity usually by a start-up company that issues cryptocurrency or virtual coins to investors.
The SEC, which issued the order on Jan. 23, said there was substantial evidence that thee Calata-led firms including Black Cell Technology Inc., Black Sand Capital Inc. and Black Cell Technology Limited Krops were selling or offering securities in the form of Krop Tokens and/or KropCoins to the public without license from the corporate regulator.
It said this constituted a violation of the Securities Regulation Code.
“The continued public offering and sale of Krops Tokens and/or KropCoins without the required license from the commission makes the public offering and selling a continuing illegal act which makes it imperative and necessary that a cease and desist oder be immediately issued,” the SEC said.
The SEC said that based on its investigation, the there firms were engaged on offering Krops Tokens and/or KropCoins via its official website, which constituted a public offering under SRC and therefore should be subject to strict registration requirements.
Black Cell said in its website there was an ongoing pre-sale of Krop Tokens and/or KropCoins at a pre-sale price of $0.70 per token, with more than 2 million tokens already sold out of the 6.4 million tokens being offered to the public.
The SEC said Black Cell claimed to be the “world’s first agricultural marketplace crypto equity ICO.”
The regulator said its investigation also showed that these firms were headed and founded by Calata, who was recently permanently disqualified by the Philippine Stock Exchange from being a director or officer of any listed company after his firm Calata Corp. was delisted from the exchange because of non-disclosure of material information.
The SEC said that as a general rule, securities could not be sold or offered to the public without a registration statement filed with the corporate regulator.
The three companies and its officers, directors, agents, representatives were also ordered to cease their internet presence relating to the sale and offering of Crops Tokens and/or KropCoins.
“The commission will institute the appropriate administrative and criminal action against any person or entities found to act as solicitors, information providers, salesmen, agents, brokers dealer or the like for and in behind of the subject corporations,” the SEC said.