Regulations

A New York crypto startup ordered to pay millions to an investor due to omissions

A crypto investor in New York will be getting close to 6 million U.S dollars in profits from his investment into a crypto startup. However, instead of the profits emanating from the natural appreciation of his investment, it is coming from a court order directing a New York crypto startup to pay the investor.

According to details filed in court, the crypto startup, Blue Ocean Capital, tricked the investor Lijun Sun, into investing 2 million U.S dollars in exchange for a crypto token that had, and still is, valued at $0.00.

Documents tabled in the U.S District Court Southern District of New York indicated that the crypto startup not only sold an unregistered token but also misrepresented and omitted crucial information pertaining to the token, MCash, when handling the investor.

Defendants violated federal securities laws by selling MCash Tokens from the United States, and accepting Plaintiff’s money in a U.S bank account without properly registering MCash Tokens with the SEC. As a result, Plaintiff is entitled to rescission of his $2 million investment and or compensatory damages.

Part of the omission identified by the court includes the fact that the crypto startup failed to disclose to the investor that there was “a one-year lockup for the investment.”

The court ruled:

Therefore, Plaintiff is entitled to compensatory damages in an amount of $2 million plus interest and punitive damages in an amount of $6 million.

Details filed in court showed that Sun met a representative from Blue Ocean capital on May 29, 2018, in New York. Surprisingly, the crypto startup presented documents indicating that it was registered on April 21, 2018. Even though the investor was shown a Delaware incorporation document, the Delaware Secretary of State’s website did not have an entry for Blue Sky Capital Group LLC. The website captures the registration date for Blue Ocean Capital as for June 6, 2018.

Do you think ghost crypto startups will continue to feed on the naivety of crypto investors?

Let us know your thoughts in the comments section below.

coinmag

Philip is an experienced blogger keen on staying updated with trends and news surrounding the blockchain and Bitcoin space. With several years of freelance experience in various industries, Philip brings his knowledge and experience into the crypto space.

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