In September 2020, three collaborative enforcement efforts by the Securities Division came to fruition.
First, with the help of the Washington Attorney General’s office, the Securities Division joined with the Commodities Futures Trading Commission (CFTC) and with agencies representing 28 other states in a civil action brought in federal court in Texas against metals.com and Barrick Capital.
The purpose of the action was to stop the sale of a fraudulent investment program which marketed overpriced precious metals to older investors who were encouraged to liquidate their investments in retirement accounts and to use the proceeds to buy the precious metals offered by those firms.
Nationwide, the scheme took in $185 million from 1,600 investors, 29 of whom were in Washington State. This is the first case where the Securities Division has joined with the CFTC in a case in federal court, although it has worked with the CFTC on various matters in the past.
Second, the Securities Division participated in a coordinated enforcement effort with the U.S. Securities and Exchange Commission (SEC), against the Bellevue, WA based cryptocurrency firm Unikrn, Inc.
The Securities Division and the SEC each entered into settlement agreements with Unikrn. The company ran an online gaming and e-sports gambling site, conducted an unregistered initial coin offering of its UnikoinGold digital coins. The SEC’s and the Securities Division’s settlements are complementary. The SEC’s settlement requires that Unikrn pay $6.1 million, substantially all of its assets, to a Fair Fund to be used to repay investors.
It also requires that Unikrn stop trading in its digital coins. The Securities Division settlement, which focuses on Unikrn’s unregistered sales to Washington investors, requires Unikrn to pay $10,000 for the costs of the Securities Division’s investigation.
Finally, the Securities Division and the Texas Securities Board brought coordinated enforcement actions against a Washington resident, Devon Shigaki, and his company, Trademining, Inc. who sold unregistered securities.
The securities included licenses for the Infinity Trade Engine, which was to generate profits for investors by directing cryptocurrency trading in accounts the investors set up.
Trademining and the investors were to share the profits from the trading. Shigaki and Trademining solicited investors through social media and craigslist postings, and on Trademining’s website.
The Securities Division’s summary order to cease and desist alleges, in addition to sales of unregistered securities, misleading statements to investors.
The statements were misleading because Shigaki and Trademining omitted material information such as who managed the trade engine, the specifics of the trade engine, as well as Shigaki’s background, which included tax liens, child support liens, civil actions, and three criminal convictions.
The Texas Securities Board alerted the Securities Division to the investment solicitations Shigaki and Trademining were making from our state.
In addition to ceasing all unlawful activities, DFI is also seeking a fine of $10,000 from Trademining, Inc., aka Trademining.io and Shigaki.
Shigaki and TradeMining have the right to challenge the Texas and Washington orders.