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FINRA Files First Crypto Complaint

The industry regulator’s complaint accuses a broker of securities fraud connected to his cryptocurrency “HempCoin.”

In a warning to investment professionals, the Financial Industry Regulatory Authority has filed its first disciplinary action involving cryptocurrencies. The regulator alleged in its complaint that Timothy Tilton Ayre, attempting to increase public investment in his “worthless public company,” Rocky Mountain Ayre, Inc., committed securities fraud and the unlawful distribution of an unregistered cryptocurrency security. The cryptocurrency was called HempCoin.

FINRA stated in its complaint that in June 2015 Ayre repackaged the cryptocurrency as a security backed by Rocky Mountain Ayre, which was traded over the counter, after having purchased the rights to HempCoin. “Ayre marketed HempCoin as ‘the world’s first currency to represent equity ownership’ in a publicly traded company and promised investors that each coin was equivalent to 0.10 shares of RMTN common stock,” the complaint added.

HempCoin was never registered, according to the complaint, and no exemption to registration was in effect. Ayre is alleged to have made “multiple false and misleading statements in RMTN’s financial statements,” said FINRA.

HempCoin ran on its own peer-to-peer blockchain and was compared to Bitcoin, according to a 2016 press release created by Ayre’s company. The release also noted the cryptocurrency was “backed by the marketable securities” of Rocky Mountain Ayre, Inc.

It’s not Ayre’s first brush with financial regulators. In 2009, he received a $10,000 fine and month-long suspension as principal for failing to enforce a supervisory system at his company Ayre Investments, according to FINRA’s BrokerCheck. In 2011, he was again fined $10,000 and suspended for two months for procedural failures around options products, including not maintaining electronic communications of two representatives.

Rocky Mountain Ayre could not be reached for comment.

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