ATBCoin Initial Coin Offering – Class Action Lawsuit Filed for Violation of the Securities Act of 1933
On December 21, 2017, a class action lawsuit was filed in United States District Court, Southern District of New York, against ATBCoin LLC, Edward Ng, and Herbert W. Hoover for violations of the Securities Act of 1933 in connection with the ATBCoin Initial Coin Offering, during which ATBCoin Defendants raised over $20 million in digital cryptocurrencies by offering and selling alleged unregistered securities.
ATBCoin Initial Coin Offering – “ATB Coin” Cryptocurrency ICO Sought to Raise Millions
According to the ATBCoin class action complaint, between approximately June 12, 2017 and approximately September 15, 2017, ATBCoin Defendants received more than $20 million in digital currency investments in exchange for ATB Coins. A press release cited in the class action complaint (“ATB Coin Cryptocurrency ICO Now Underway Across The Globe Company Offers Investors a Unique Opportunity”) stated:
With the wildly successful captivating press about ATB Сoin’s U.S. introductory launch last Thursday, the company’s Management Team is reporting over $12 million has been raised within the first fifteen minutes of the cryptocurrency’s highly-anticipated ICO.
According to CEO Edward Ng, the company’s technologically revolutionary cryptocurrency has already attracted excited investors from the United States, Canada, and China. Edward Ng further elaborated the company is pleased with such a high level of interest and optimism from investors; adding that the ICO will be ongoing for the next four weeks, with a targeted amount of $50 million. [Emphasis added]
ATB Сoin’s ambitious plans for global growth are already in place and are moving forward. This cryptocurrency is developed with the world’s most advanced protocols built-in such as SegWit, Lightning Network, and Smart Contracts. Borderless micro payment transactions are recorded in as little as microseconds. “Our team is well-positioned to move forward with our intermediate goal of opening offices across the U.S., Canada, Latin America, and Asia,” said Herbert W. Hoover III, ATB Coin co-founder.
Details of ICO: Crowdfunding of ATB Coin tokens began June 12, 2017 and will continue for the next four consecutive weeks. Potential investors are offered bonuses up to 10%, which will motivate an investor for an additional capital investment. Altogether, the maximum tokens issued will number 33 million, of which 50 million will be assigned to the Crowdfunding ICO.
ATBCoin Initial Coin Offering – ICO Amount Raised Uncertain
Although the total amount raised during the ATBCoin Initial Coin Offering has not, according to the class action complaint, been publicly stated by the ATBCoin Defendants, ICO-related websites estimate that the ATBCoin Initial Coin Offering raised between $20,400,000 and $24,210,000.
ATBCoin Initial Coin Offering – The ICO’s Declared Purpose
According to the ATBCoin class action complaint:
The purported primary purpose of the ATB [Initial Coin Offering] was to raise capital to create and launch a new blockchain that would “deliver blazing fast, secure and near-zero cost payments to anyone in the world.”[] Defendants claimed this network, which was to launch on September 1, 2017, would be “the fastest blockchain-based cryptographic network in the Milky Way galaxy.”[] Defendants actually launched the “ATB Blockchain” on September 14, 2017. It is hardly the “fastest . . . in the Milky Way galaxy.” Rather, adoption of ATB Coin and the ATB Blockchain has been essentially nonexistent, and the value of ATB Coins has continuously fallen.[] [Emphasis added]
ATBCoin Initial Coin Offering – ATBCoin Touts an Investment Opportunity
According to the ATBCoin class action complaint:
The [ATBCoin] Defendants . . . made numerous public statements touting the ATB [Initial Coin Offering] and ATB Coins as investment opportunities. For example, on July 9, 2017, Defendants issued a press release entitled, “PR: Over 5,500 People Choose to Invest in ATB Coin.”[] This press release concluded with: “Only 3 days left before the launch of ATB Coin! Invest in the cryptocurrency of the future, while the project offers the most favorable terms!” [Emphasis added]
The aforementioned press release also stated:
At the moment, over 5,500 people from all over the world have made investments in ATB Coin. The number of investors continues to increase with each passing hour. To support the project, an amount exceeding $15,800,000 has already been collected. ATB Coin’s affiliate network also continues to grow. The company enters into partnership agreements with crypto-exchanges, payment systems and services. The recent participation in IV International Blockchain Summit-2017 brought the project even more contacts of potential partners.
Currently, the 2nd stage of ATB Coin ICO started, lasting until the official blockchain network launch, which is scheduled for September 1st. The first round of the second stage of ICO, during which investors may receive a 20% bonus, was completed. The 3rd round of ICO will last until August 31th. Anyone who joins the project within this time limit will receive a 10% bonus of the invested amount on their account. [Emphasis added]
ATBCoin Initial Coin Offering – An Alleged “Clear Offer and Sale of Securities”
According to the class action complaint:
The core offer during the ATB [Initial Coin Offering] was 1 ATB Coin for $1, payable in Bitcoin (“BTC”), Ether (“ETH”), Litecoin (“LTC”), and potentially other cryptocurrencies. However, there are indications that the offer was modified throughout the ICO. For example, the offer in August 2017 appears to have been 1 ATB Coin for $1.5, payable in BTC, ETH, or LTC.[] Further, in September 2017, the offer was 1 ATB Coin for $2.5, also payable in BTC, ETH, or LTC.
The ATB [Initial Coin Offering] was a clear offer and sale of securities because, inter alia, Defendants touted, and Plaintiff and other ATB ICO investors reasonably expected, that the ATB Coins received in exchange for their investments would be worth more than the ETH, BTC, LTC, or other currencies invested. Additionally, . . . Defendants have explicitly referred to the ATB [Initial Coin Offering] participants as “investors” and repeatedly stressed the profit potential from holding ATB Coins. [Emphasis added]
. . .
Due to the varied and innumerable ways in which investors can be, and are likely to be, manipulated and harmed absent any of the protections under the federal securities laws, Sections . . . of the Securities Act provide for strict liability against any person who offers or sells an unregistered security. As detailed [in the complaint], the ATB [Initial Coin Offering] was, and has at all times been, an offer and sale of unregistered securities, and [the ATBCoin] Defendants are therefore strictly liable under . . . the Securities Act. [Emphasis added]
ATBCoin Initial Coin Offering – ATBCoin Price Plunge
A ccn.com story, “ATBCoin Hit With Class-Action Lawsuit After $20 million ICO,” reported that
[a]ccording to an estimate from ICO tracker CoinSchedule, the ATBCoin token sale raised $20.4 million worth of bitcoin, ether, and litecoin during its ICO, which ran from June through September.
However, to the chagrin of investors, the value of ATBCoin price has plunged from a high of $1.52 shortly after the ICO to less than $0.48 at the time of writing, even as the values of the coins used to contribute to the ICO have surged. [Emphasis added]
Image: Pexels, David McBee, CC0 1.0 Universal
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