SEC warns public against Lodi Coins

The Securities and Exchange Commission (SEC) has advised the public against investing in Lodi Coins, a supposed virtual currency offered on social media without the necessary licenses from regulators.

In an advisory dated Sept 29, the Commission flagged the public offering of Lodi Coins by Lodi Technologies Inc. without securing from the SEC the required order of registration of securities and certificate of permit to offer and sell securities.

Lodi Coins is not registered as a virtual asset service provider with the Bangko Sentral ng Pilipinas (BSP). Lodi Technologies does not have the corresponding certificate of authority from the central bank as a money service business (MSB), as required under the BSP guidelines for virtual asset providers.  It is also not registered as an MSB with the Anti-Money Laundering Council.

Lodi Technologies offered Lodi Coins to the public through Facebook, Twitter, Instagram, and Discord. Investment packages range from P12,500 to P500,000, with “the potential to earn at least 10 times or 1,000 percent” of the total amount invested after Lodi Coin’s initial coin offering.

On its website, Lodi Technologies claimed that Lodi Coins were utility tokens, and could not be considered as a share or a security, as defined by Republic Act No. 8799, or the Securities Regulation Code (SRC).

However, echoing the U.S. Securities and Exchange Commission , the SEC Philippines noted that “securities law may apply to various activities, including distributed ledger technology, depending on particular facts and circumstances, without regard to the form of the organization or technology used to effectuate a particular offer or sale.”

“By merely calling a token a ‘utility’ token or structuring it to provide some utility does not prevent the token from being a security. Tokens and offerings that incorporates features and marketing efforts that emphasize the potential for profits based on the entrepreneurial or managerial efforts of others contain the hallmarks of a security,” the SEC said.

While Lodi Technologies was registered with the SEC as a corporation, it does not have the necessary license and authority to offer investments to the public.

The Commission stressed  that Lodi Technologies’ articles of incorporation stated it was a business process outsourcing (BPO) firm. This constitutes serious misrepresentation as to what the corporation can do or is doing to great prejudice of or damage to the public, a ground for revocation of certificate of registration under Presidential Decree 902-A.

Moreover, Lodi Technologies’ incorporation papers explicitly state that “it shall not solicit, accept, or take investments from the public, nor issue investment contracts,” the SEC added.

“Hence, the public is advised not to invest or stop investing in Lodi Coins and Lodi Technologies Incorporated’s investment-taking scheme who operate without the necessary licenses and/or authority.”