Really? According to the website created by Tomahawk Exploration LLC (Tomahawk), in connection with its Initial Coin Offering (ICO) for its Tomahawk tokens (TOM), the ICO represented “a substantial investment opportunity . . . capable of producing significant risk-adjusted rates of return.”
Once again, the U.S. Securities and Exchange Commission (SEC) had no choice but to remind the world that ICO issuers cannot act with impunity and that fraud is, well, fraud. On August 14, 2018, the SEC issued a Cease and Desist Order to Tomahawk (Order) in connection with its ICO that initially took place between July and September of 2017. Tomahawk sought to raise $5 million through the sale of TOM tokens to fund the cost of drilling oil wells. According to Tomahawk’s whitepaper, TOM tokens were “directly backed by oil production” and gave their holders an option to convert into Tomahawk equity at a later date. The SEC had no trouble concluding the tokens constituted “investment contracts” and were thus securities, but the Order gives us more than that.