SEC Flags Riscoin Operator as Unregistered Investment Scheme

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The Securities and Exchange Commission (SEC) has warned the public against investing in League of Seagull Ltd., also known as Seagull Alliance, saying the group is not authorized to solicit funds in the Philippines and may be operating a Ponzi-style scheme through a platform called Riscoin.

Key Details

In an advisory, the regulator said the entity has been offering investments described as cryptocurrency copy trading, promising exponential growth tied to continuous deposits. The minimum investment was set at $500, or about 30,000 pesos.

The SEC said such activities violate Sections 8, 26 and 28 of Republic Act No. 8799, or the Securities Regulation Code (SRC), and Section 11 of Republic Act No. 11765, or the Financial Products and Services Consumer Protection Act.

Claims Of U.S. Registration

League of Seagull Ltd. claims to be headquartered in Colorado and registered on Sept. 3, 2024, according to the advisory. SEC said records from the Colorado Secretary of State show the company filed articles of incorporation under Entity ID No. 20241936415 and listed Ernest Dewey May Jr. as amended registered agent.

Despite its U.S. registration, the SEC said the entity is not registered in the Philippines and does not hold the secondary license required to offer or sell securities locally.

The commission identified several individuals allegedly linked to the operation in the United States, including Charles Hamilton, Martin Collins and others involved in marketing, compliance and operations functions.

Nationwide Recruitment

The regulator said the group began expanding operations in the Philippines on Sept. 19, 2024, and has since established a social media presence and physical recruitment activities across multiple regions, including Pangasinan, Metro Manila, Central Luzon, Central Visayas, Northern Mindanao and the Davao Region.

In Pangasinan, the SEC said the operation is promoted by a local group known as Team Bagwis Payaman. The group allegedly conducts recruitment activities online and through an office operating under the name Seagull Alliance Clothing in Pozorrubio, Pangasinan.

The advisory listed several Facebook pages and groups associated with the promotion of League of Seagull Ltd. and Riscoin.

Ponzi Characteristics Cited

The SEC said the scheme meets the definition of an investment contract under the SRC, involving an investment of money in a common enterprise with an expectation of profits derived primarily from the efforts of others.

Investigators found the operation exhibits characteristics of a Ponzi scheme, where payouts to earlier participants are sourced mainly from contributions of new investors rather than legitimate business activity.

Under Section 26 of the SRC and Section 11 of the FCPA, fraudulent investment solicitations, including Ponzi schemes, are prohibited.

The commission said securities structured as investment contracts under a Ponzi scheme are inherently fraudulent and not entitled to registration.

Criminal Liability And Penalties

The SEC warned that individuals acting as brokers, agents, promoters, recruiters, influencers or enablers for League of Seagull Ltd., Seagull Alliance or Riscoin may face criminal prosecution.

Violations may carry penalties of up to 5 million pesos in fines or imprisonment of up to 21 years, or both, under Section 73 of the SRC. The advisory also cited the Supreme Court ruling in Securities and Exchange Commission v. Oudine Santos (G.R. No. 195542, March 19, 2014), affirming potential liability for recruiters in investment schemes.

The SEC urged the public not to invest or to stop investing in the offerings of League of Seagull Ltd. and its representatives, and encouraged reporting of related activities to its Enforcement and Investor Protection Department.

This article is published on BitPinas: SEC Flags Riscoin Operator as Unregistered Investment Scheme

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