On November 16, 2018 the SEC settled an unregistered ICO case with the issuer, Paragon Coin. See https://www.sec.gov/litigation/admin/2018/33-10574.pdf.
It doesn’t get much better than this case … a former Miss Iowa and “Amazing Race”contestant married to a Russian guy who (according to social media) describes himself as a “leading luxury life figure” form a company “to deploy a suite of blockchain enabled products to organize, systematize, and bring verification and stability to the cannabis industry”. To do this, they raised between $12 million (per the SEC) and $70 million (per a separate class-action suit) by offering PRG tokens in an (oops) unregistered securities offering.
The facts as set out in the SEC’s claim and the allegations contained in the class-action law suit are the foundation for an HBO special. In the summer of 2017 Paragon’s website, Telegraph account, email, Twitter, Facebook, and other social media (everything, apparently, except an SEC registration statement) began touting their Ethereum blockchain-based solutions for solving most of the cannabis industry’s business and compliance issues: “to deploy a suite of blockchain enabled products to organize, systematize, and bring verification and stability to the cannabis industry.” In addition, to ParagonChain, ParagonCoin, ParagonOnle, and ParagonAccelerator, they offered ParagonSpace: to purchase and refurbish space for “niche co-working spaces” for cannabis entrepreneurs (called “Paragonians”).
On August 15, 2017 Paragon published a White Paper (again, on its website and social media, instead of a business plan and offering statement on the SEC’s website). In a series of communications, Paragon outlined its PreSale to run from August 15 – September 15, which would offer 70 million of the 200 million PRG tokens at $0.75 – $0.90 each; then a CrowdSale from September 15 – October 15, which would offer 30 million PRG tokens at $1.00 the first day, going up $0.05 each day thereafter (which turned out to be false and perhaps a ruse to get early investors to buy more: in fact, they dropped the prices up to 55% in the CrowdSale period). The PRG tokens could only be purchased with other cryptocurencies, and Paragon told investors that the CrowdSale raised 533 BTC (~$7.3 million at one point) and 8,092 ETH (~$10.2 million). The SEC materials indicate 8,323 investors purchased the equivalent of $12,066,000 worth of PRG tokens. Eventually the SEC weighed in and filed an Administrative Action which Paragon consented to. Paragon will pay a $250,000 penalty, offer refunds, and get their tokens registered. In the meantime, they’ve bought and built out a co-op space just off Sunset Boulevard in Hollywood for what they describe as their “Paragonians”. But none of this is news. Between the end of the presale and beginning of the crowdsale, Forbes ran a story, “The Iowa Beauty Queen, The Russian Technocrat and their Cannabis Crypto Launch”. According to the SEC, over 8,300 people bought PRG tokens. Caveat Emptor, folks!