The Security and Exchange Commission (SEC) has issued a public advisory against investing in Ploútos COIN, an offshoot of Cagayan de Oro-based Freedom Traders Club, on July 12, 2018.
The corporate regulator stated that Freedom Traders is not registered as a corporation or partnership and lack the necessary registration and/or license, so it is not authorized to solicit investments from the public as prescribed under Section 8 of Republic Act 8799 or the Securities Regulation Code (SRC).
The agency received a report that Freedom Traders Club has been conducting orientation seminars in the Visayas and Mindanao regions to promote the grand launching of Ploútos COIN. The said initial coin offering (ICO) was launched during the event called Ploútos Grand Launching at the Atrium Limketkai last July 8.
During these seminars, Ploútos COIN was also advertised and promoted as an investment vehicle where coin holders can earn a profit by merely holding the said coins, its value increases through supply and demand, and its price movement being similar to bitcoin.
Ploútos COIN was reportedly first sold last January 1 at $1 USD and the value of the coin has then increased to $1.75 USD at the time of ICO event, where it was also publicly advertised that its value will “skyrocket” after six months.
According to SEC’s Enforcement and Investor Protection Department (EIPD),
Undoubtedly, the PLOUTOS COINS are SECURITY TOKENS and its sale and offer constitute a sale of offer of an investment contract within the purview of the term “securities” as defined by law.”
Applying the Howey Test as discussed by the Honorable Supreme Court in Power Homes Unlimited vs. SEC (G.R. No. 164182, February 26, 2008), Ploútos COIN is considered as an investment contract because it fulfills the criteria where investment contract has been defined as a contract, transaction or scheme, whereby a person invests his money in a common enterprise and is led to expect profits primarily from the efforts of others.