Thursday, June 20, 2024

CDO made permanent against group offering digital currency via MLM scheme

The Securities and Exchange Commission (SEC) has permanently stopped a group of companies composed of Astrazion Noble Task Community Foundation, Astrazion Global Holdings Philippines, and Astrazion International from offering their digital currency to the public.

PDAX

In a resolution dated August 11, the SEC declared the cease-and-desist order (CDO) issued against the Astrazion Group as it denied the motion filed by Astrazion Foundation and Astrazion Holdings for the lifting of the order.

The SEC issued the cease-and-desist order against the Astrazion Group on May 12, after finding that the group has operated an online multi-level marketing platform where it actively promoted the sale of its digital currency called AZNT Token for 10 cents per token.

The group offered seven packages with guaranteed returns of 3% per day. The starter package worth $100 could yield $300 in 100 days, while the double platinum package guaranteed a whopping $30,000 within the same period from an initial investment of $10,000.

The Astrazion Group enticed the public to invest by assuring members that the AZNT Tokens would be registered and listed as a cryptocurrency at Coin Market Cap, and would be traded in the digital currency trading platform Binance.  The AZNT token’s value could allegedly rise to $10 from its current price of 10 cents.

Aside from the supposed potential surge in value of the AZNT Token, the Astrazion Group promised investors a residual income and direct referral income distribution. Payouts were supposed to be released through Coins.ph.

The scheme involved the sale and offer of securities to the public in the form of investment contracts, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others.

Astrazion Global and Astrazion Foundation were duly registered corporations with the SEC. However, they never secured a secondary license from the commission as issuer of securities or broker dealer nor registered any securities for public offering pursuant to the SRC.

Meanwhile, Astrazion International was not registered with the SEC as a corporation or partnership. In their motion to lift the CDO, the Astrazion Group argued, among others, that the sale of the tokens to non-members did not constitute sale of investment contracts because the scheme was decentralized and did not rely primarily on the efforts of others to earn a profit.

The group added that the AZNT Tokens could not be considered as securities under the purview of the Securities Regulations Act because they were functional and not speculative in the sense that they were intended to be used, in the future, for payment of good and services.

The SEC, however, dismissed the arguments of the Astrazion Group, noting that the SRC adopted a very broad definition of securities, which was intended to be liberally construed to achieve the main purpose of its enactment — the regulation of the issuance and sale of securities, and the prevention of fraud.

“The law considers investment contract[s]as securities because what the purported issuer is, or will be using to further his business is money put in by the public who expects a return of their investment,” the SEC said.

“From this perspective, and in the rule on the liberal construction of the concept of securities, the term investment contract should include and cover all forms and varieties thereof which are known or considered, or ought to be known or considered to be such, in the financial world,” it added.

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