According to the US regulator, David Laurance and Tomahawk Exploration attempted to raise money through the sale of blockchain-based digital tokens called ‘Tomahawkcoins’. The promotional materials used inflated projections of oil production that were contradicted by the company’s own internal analysis and misleadingly suggested that Tomahawk possessed leases for drilling sites when it did not. 

The SEC claimed the materials described Laurance as having a ‘flawless background’ but failed to disclose his prior criminal conviction for his role in fraudulent securities offerings.

Tomahawk claimed that token owners would be able to convert the Tomahawkcoins into equity and potentially profit from the anticipated oil production and secondary trading of the tokens.  Although the ICO failed to raise money, Tomahawk issued tokens through a ‘bounty program’ in exchange for online promotional services. 

Without admitting or denying the SEC’s findings, Tomahawk and Laurance consented to a cease and desist order and Laurance consented to an officer and director bar, penny stock bar, and a $30,000 penalty. 

Robert Cohen, chief of the SEC’s cyber unit, said: ‘Investors should be alert to the risk of old-school frauds, like oil and gas schemes, masquerading as innovative blockchain-based ICOs.’ 

The SEC has issued an investor alert encouraging investors to check the background of anyone selling or offering them an investment, and has highlighted potential warning signs of investment fraud including ‘guaranteed’ high investment returns and unlicensed sellers.

Report by Pat Sweet