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CEO Of Porn-Focused Cryptocurrency Disappears With Investors’ Money

 

CEO Of Porn-Focused Cryptocurrency Disappears With Investors' Money

Courtesy of Zero Hedge

The burgeoning market for initial coin offerings is rife with fraud and abuse thanks to unscrupulous people like the creator of FMtokens, a coin designed as a means for paying performers for live webcam chats. The New York Post reported Monday that investors in FMtokens – which purportedly raised just shy of $5 million – are complaining that the company’s shadowy CEO, Jonatha Lucas, has absconded with their money while refusing to deliver the promised tokens.

Lucas aimed to raise as much as $25 million, according to an investment plan.

A cryptocurrency built for watching live-streaming porn is turning out to be a buzz-kill.

Four investors in the digital currency, called Fantasy Market, claimed last week that its shadowy CEO disappeared with their money — and has not refunded all their investment despite repeated requests.

The alleged inability of investors to trade out of the Fantasy Market tokens, or FMtokens, could stand as a warning to all investors in the red-hot cryptocoin market.

Jonathan Lucas, the brains behind FMtokens, was aiming to raise as much as $25 million last year, according to Lucas’ white paper — the investment plan circulated among investors.

The tokens were to be used to pay for livestreaming porn.

Small-time investors from around the world have scrambled to invest in the largest digital currencies – like bitcoin, Ethereum and ripple – which have seen astronomical returns.

Circling back to FMtokens, the venture flamed out in November after the NYP  questioned Lucas for about an hour about how his ICO would work and about statements he made in the white paper. The CEO insisted he wasn’t trying to scam anybody, and that he was using his real name. Several of the investors who lost their money believe the name John Lucas is an alias.

“Jonathan Lucas (most likely an alias) has scammed us and run off with the cryptocurrency,” one irate investor fumed to The Post, more than two months after investing in Fantasy Market.

According to the Post, it’s unclear how close Lucas got to his $25 million fundraising goal. He told a reporter in November he had raised less than $2 million.

It’s unclear whether the SEC intends to act against Lucas (at this point, he’s probably already fled to some non-extradition country where he can safely deploy his ill-gotten gains). No legal or civil actions have been taken against him at this time. But the agency has been stepping up its enforcement against fraudulent ICOs since it declared in July that all digital tokens should be treated as securities, and that all pertinent laws and regulations would apply. In China, financial authorities have banned ICOs. And other governments have considered acting to suppress the market.

Back in September in private chats seen by The Post to being just 13% away from raising $5 million, which translates to about $4.4 million.

On the company’s website, Lucas posted a message asking out-of-pocket investors to contact the company “in the next 90 days” to secure a refund.

One investor told the post that the company refunded some of the Ethereum he had invested in the project. Instead of returning his initial investment along with the 160% return that’s accrued since he invested in September, the company pocketed the difference.

“[Recently] I wrote threatening to file police and FBI reports,” a second aggrieved investor told The Post. "Within hours they refunded me ethereum with a dollar amount equal to what I had contributed in early September, but since the coin has more than tripled in value since then, they kept the rest of my contribution, essentially stealing quite a lot of money from me."

Another investor claimed that Lucas appears to be actively trading on cryptocurrency exchanges, possibly with the money stolen from his erstwhile investors.

This is hardly the only example of outright fraud in the ICO space. Tezos, which raised more than $230 million in an ICO over the summer that attracted the interest of several big-name Silicon Valley VC firms, has elicited several investor lawsuits after the company has missed deadlines to deliver the tokens it promised investors during the crowdsale.

According to chat records obtained by the post, Lucas repeatedly assured his investors that FMtokens aren’t a scam.

“I’m not in the business of scamming people, or again, I wouldn’t have used my real name for the project,” Lucas wrote in a Nov. 14 chat.

His behavior would suggest the opposite is true.


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