Just a month after launching an exam sweep of entities based in Massachusetts raising money from initial coin offerings, Commonwealth Secretary William Galvin on Wednesday charged a Brookline man and his company with the unregistered sale of a security marketed as "Caviar Tokens."
According to the complaint, Kirill Bensonoff and his Cayman Islands company, Caviar, allegedly told Massachusetts investors that the proceeds from the Caviar Tokens would be used to fund house-flipping real estate projects, in addition to financing the acquisition of a portfolio of various cryptocurrencies.
"In sum and substance, Bensonoff and Caviar seek to use the proceeds of the ICO to finance the creation of a hedge fund and offer freely transferable shares to investors in the form of Caviar Tokens," the complaint states.
The complaint filed Wednesday by the Massachusetts Securities Division states that Caviar raised approximately $3.1 million through a combination of cryptocurrencies and cash.
"Bensonoff and Caviar have offered and continue to offer Caviar tokens without registration or exemption from registration in the Commonwealth," Galvin said in a statement.
Bensonoff formed Caviar in the Cayman Islands to avoid state securities regulation, Galvin says, but has conducted business out of his Brookline home.
"This serves as a warning to those who would try to use the recent Bitcoin craze to circumvent securities laws in Massachusetts," Galvin added.
