SEC Files Subpoena Enforcement Against Alleged Pump And Dump ICO

ICO News, News | October 11, 2018 By:

The US Securities and Exchange Commission (SEC) has filed a subpoena enforcement action against a company and its sole trustee that are connected to an alleged fraudulent initial coin offering (ICO).

According to the SEC’s application, filed on October 5 in US District Court for the Central District of California, the agency is investigating Saint James Holding and Investment Company Trust and its trustee, Jeffre James, as part of a probe into an alleged pump-and-dump scheme in the stock of Cherubim Interests Inc.

To pump its stock price, Cherubim allegedly issued false public statements in January of this year claiming that the company had executed a financing commitment of $100 million to launch an initial coin offering for “The Self-Sustaining Intentional Communities Coin (SJT). The company claims the token was “designed for cooperative living, working and healthier lives and offers extensible diversity in the use of the coin over current coins like Bitcoins for both financial and societal gain.”

The SEC alleged that after Cherubim’s stock price and trading volume increased on this news, certain individuals associated with the company “dumped” their overvalued Cherubim stock for significant profits. The regulator suspended trading in the securities of Cherubim in February and issued subpoenas to St. James Trust and James in June for the production of documents related to Cherubim’s ICO.

“The SEC made multiple attempts to contact James, extended its deadline for responding to the subpoenas several times, and personally served James with copies of the subpoenas,” the regulator said. “James and St. James Trust, however, have not responded to the SEC or produced any documents responsive to the subpoenas.”

The SEC is now seeking an order from the District Court of California compelling James and St. James Trust to produce all responsive documents. The agency noted that it is continuing its fact-finding investigation and, to date, has not concluded that anyone has violated the securities laws.