SEC shuts ‘Riscoin’ over alleged crypto scam
MANILA, Philippines — The Securities and Exchange Commission (SEC) has ordered the alleged cryptocurrency investment scheme “Riscoin” and related entities to immediately stop soliciting investments from the public over the unauthorized sale of securities.
In a cease-and-desist order dated May 14, the SEC’s Enforcement and Investor Protection Department said Riscoin, Riscoin Exchange, Riscoin Trading, League of Seagull Ltd., and Seagull Alliance had been actively offering investments through social media platforms and messaging applications such as Telegram and Bonchat.
The commission said the entities allegedly operated a copy trading scheme, in which investors relied on so-called “crypto managers” who supposedly generated unusually high and guaranteed daily returns from cryptocurrency trading.
READ: SEC warns vs unregistered schemes, crypto platforms
The SEC said it had earlier issued advisories on Feb. 12, warning the public not to invest in the scheme and to exercise caution in dealing with individuals soliciting investments on behalf of Riscoin.
Despite these warnings, the regulator said the entities allegedly continued to solicit funds while presenting business registration certificates purportedly issued by foreign jurisdictions.
However, the SEC stressed that foreign registration “does not, by itself, authorize them to operate, solicit investments, or offer securities within the Philippines.”
Based on certifications from several SEC departments, the commission said Riscoin was not registered either as a corporation or a partnership in the Philippines. It also had not secured a license to sell securities and was not authorized to operate as a crypto-asset service provider.
The SEC said the investment scheme bore the characteristics of an “investment contract” under the Securities Regulation Code (SRC), applying the so-called Howey Test adopted by Philippine jurisprudence.
READ: Cryptocurrency scams: a guide
According to the order, investors allegedly pooled money into a common enterprise with the expectation of profits primarily derived from the efforts of others, particularly the scheme’s operators and “crypto managers.”
The commission added that the alleged public offering of unregistered securities through social media and electronic communications violated the SRC and could also constitute financial fraud under the Financial Products and Services Consumer Protection Act.
The SEC said it would pursue appropriate administrative and criminal actions against individuals involved in the operation.
Respondents may file a verified motion to lift the cease-and-desist order within five days from receipt of the order. /atm
