SEC PHOTO
SEC PHOTO

SEC issues warning vs investing in LodiCoins

THE Securities and Exchange Commission (SEC) has warned the public against investing in LodiCoins, a supposed virtual currency being offered on social media without the necessary licenses from regulators.

In a forwarded advisory, SEC flagged the public offering of LodiCoins by Lodi Technologies Incorporated, which was registered as a corporation.

However, the agency said they are operating without securing the required order of registration of securities and certificate of permit to offer and sell securities. Hence, they don’t have the authority to offer investments to the public.

"According to information gathered by the Commission, LodiTech has been using several social media platforms such as Facebook, Twitter, Instagram, and Discord in enticing people to invest their hard-earned money in LODICOIN, a virtual currency created and operated by Lodi Technologies Incorporated through lodicoins.com, the official website of the virtual currency," the Commission said.

Investment packages ranged from P12,500 to P500,000, with the potential to earn at least 10 times or 1,000 percent of the total amount invested after LodiCoin’s initial coin offering.

However, SEC said LodiCoins is not registered as a virtual asset service provider with the Bangko Sentral ng Pilipinas (BSP).

Lodi Technologies also did not have the corresponding certificate of authority from the central bank as a money service business (MSB), as required under the BSP guidelines for virtual asset providers.

Lodi Technologies is also not registered as an MSB with the Anti-Money Laundering Council.

According to its website, Lodi Technologies claimed that Lodi Coins were utility tokens, and could not be considered as a share or security, as defined by Republic Act No. 8799, or the Securities Regulation Code (SRC).

However, echoing the US Securities and Exchange Commission, the SEC Philippines noted that “securities law may apply to various activities, including distributed ledger technology, depending on particular facts and circumstances, without regard to the form of the organization or technology used to effectuate a particular offer or sale.”

The Commission said some virtual currencies may partake of the nature of securities as defined under the SRC, whereby a person invests money in a common enterprise and is led to expect profits primarily from the efforts of others.

“The same goes for (Lodi Coins) where Lodi Technologies Incorporated seeks to use the money it gathered from the public to fund its purported project on the promise of profits,” it said.

“In other words, merely calling a token a ‘utility’ token or structuring it to provide some utility does not prevent the token from being a security. Tokens and offerings that incorporate features and marketing efforts that emphasize the potential for profits based on the entrepreneurial or managerial efforts of others contain the hallmarks of a security,” it added.

The Commission highlighted that Lodi Technologies’ articles of incorporation stated that it was a business process outsourcing (BPO) firm, much different from its actual business model.

This constitutes serious misrepresentation as to what the corporation can do or is doing to the great prejudice of or damage to the public, a ground for revocation of certificate of registration under Presidential Decree 902-A.

Lodi Technologies’ incorporation papers also explicitly state that it shall not solicit, accept, or take investments from the public, nor issue investment contracts.

“Hence, the public is advised not to invest or stop investing in Lodi Coins and Lodi Technologies Incorporated’s investment-taking scheme who operate without the necessary licenses and/or authority,” the Commission advised the public. RGL

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