SEC issues red flag advisory versus Freedom Traders Club
THE Securities and Exchange Commission (SEC) has issued on Friday, July 13, a red flag advisory against Freedom Traders Club and its virtual currency product ‘Ploutos Coins.’
According to the advisory, Freedom Traders Club is not registered as a corporation or partnership and “is not authorized to solicit investments from the public as the above-mentioned entity did not secure prior registration and/or license to solicit investment from the Commission as prescribed under Section 8 of the Securities Regulation Code.”
Based on information gathered by the Commission, Freedom Traders Club has been conducting orientation seminars throughout the Visayas and Mindanao regions to promote the grand launching of Ploutos Coin.
The said grand launching was conducted last Sunday, July 8, in Limketkai Atrium, Cagayan de Oro City.
Ploutos Coin, during the orientation seminars, was advertised and promoted as an investment vehicle where coin holders can earn profit by merely holding the said coins.
“It should be noted that, the Commission, thru the EIPD, issued the 8 January 2018 Advisory on Initial Coin Offerings stating that ‘some of these new cryptocurrencies or digital coins, based on the facts and circumstances surrounding their issuance, follow the nature of a security as defined by section 3.1 of the Securities Regulation Code,’” the advisory said.
SEC also considered Ploutos Coin as an investment contract based on Securities Regulation Code, which define investment contract as a “contract, transaction or scheme, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of other.”
“Since this scheme involves the sale of securities to the public, the SRC requires that the said securities offered are duly registered and that the appropriate license and/ or permit to sell securities to the public are issued to the corporation and/ or its agents, pursuant to the provisions of Section 8 of the SRC,” the advisory said.
SEC said those who act as salesmen, brokers, dealers or agents of these companies in selling or convincing people to invest in the investment scheme being offered by these cryptocurrency mining companies will be prosecuted and held criminally liable under Section 28 of the SRC.
Penalty includes a maximum fine of P5 million or of penalty of 21 years of imprisonment or both pursuant to Section 73 of the SRC.
“Accordingly, those who invite or recruit other people to join or invest in this venture or offer investment contracts or securities to the public may be held criminally liable or accordingly sanctioned or penalized in accordance with the Supreme Court decision in the case of SEC vs Oudine Santos (G.R. No. 199542, March 19, 2014),” it added.
The SEC advised the public to be vigilant in this kind of activities and to take the necessary precaution in dealing with Freedom Traders Club or its representatives.
The Commission also urges anyone who has knowledge or information about any business transaction involving these securities or investment opportunities to report such activity.