The Securities and Exchange Commission has permanently barred CROWD1 Asia Pacific Inc., which represents itself as a digital marketing business, from soliciting investments from the public.
The SEC issued a cease-and-desist order against CROWD1 on May 12 after finding that it was operating “a fraudulent investment scheme consisting of the sale and/or offer for sale of (nonexistent) securities in the form of investment contracts to the public.” CROWD1 submitted a motion to lift the order, which was denied by the SEC in a resolution on July 2 for lack of merit.
“A careful review of the motion to lift will show that except for its general denials, CROWD1 failed to present any evidence in support of its claim that it is not engaged in the sale and/or offer for sale of securities in the form of investment contracts,” the resolution said.
CROWD1 only registered as a corporation for the primary purpose of engaging in business process outsourcing services. The SEC said the certificate of incorporation granted to CROWD1 prohibited it from soliciting, accepting or taking investments or placements from the public and from issuing investment contracts.
Based on the SEC’s investigation, CROWD1 solicited and accepted investments from the public by offering what it claimed to be educational packages for P6,000 to P240,000.
CROWD1 promised member-investors five different bonuses. It also touted a pairing incentive payable in euros to encourage investors to recruit new members.
CROWD1 claimed it generated income from online games and facilitated the generation by its members of residual income from its affiliate gaming firms such as AFFIGLO and MIGGSTER, the SEC said.
However, the SEC ruled that CROWD1’s scheme involved the sale or offer of securities in the form of investment contracts and thus required a secondary license under the Securities Regulation Code.
The SEC also ruled that the act of CROWD1 of publishing online and making presentations on its business scheme constituted a public offering under the law.
The SEC has prohibited CROWD1 from transacting any business involving funds in its depository banks and from transferring, disposing or conveying assets for the benefit of the investors. INQ