Two recent SEC rulings on stock and crypto promotions put the spotlight firmly on emerging case law focus in the US (and other jurisdictions) when it comes to cannabis and crypto
There are two sensational SEC rulings that have just come out, on both dubious stock promotion schemes in the cannabis industry, and separately, celebrity endorsement of crypto, that, seen with in the context of Juicy Fields (as it unfolds internationally) places all in an interesting light.
In the first case, on September 30, the American Securities and Exchange Commission (or SEC) announced charges against six individuals and two companies for their involvement in a fraudulent scheme to promote the stocks of companies that claimed to be raising money for three companies – Elegance Brands, Emerald Health Pharmaceutical and High Times.
The ruling and issues at stake are a bit complicated, but basically several individuals, including a recidivist offender, promoted securities (stocks) without disclosing that they were being paid to do so – and even tried to hide the same by issuing fake consulting invoices rather than invoices acknowledging they were actually being paid to hype the stock. The promotions were effective. About $80 million worth of stocks in these companies were sold as a result.
High Times was not charged. However according to the analysis by Green Market Report, and the complaint itself, “High Times ultimately entered into an agreement to pay (the promoting companies) 2.5% of the funds raised through such promotions. The receiving entity was deliberately constructed to conceal that payments from High Times would go to the promoter.
The Kardashian Keeps Up
Yesterday, the SEC announced that had fined reality star Kim Kardashian $1.26 million for promoting a cryptocurrency without disclosing how much she had been paid to do so. In June of 2021, Kardashian posted an Instagram story inviting her 328 million followers to invest in a cryptocurrency also deceivingly named EthereumMax.
While Kardashian did not admit to wrongdoing in the settlement reached with the regulatory agency, she agreed not to promote any more crypto projects for the next three years.
The fine of course is a drop in the bucket for Kardashian.
However, these two cases are an indicator of how US, and presumably European authorities, are leaning on such issues as stock and crypto promotion, generally.
How Does This Relate to Juicy Fields?
The company paid both influencers and conferences (that is known so far) to promote the entire idea of Juicy Fields’ legitimacy. The conferences themselves of course advertised who their sponsors were – which involves that money has been paid – but not how much.
Beyond that, there is of course the entire layer of influencers who also promoted the scheme via social media.
Then of course there is the issue of violating securities law – namely claiming that BaFin had authorized the sale of said securities and the failure of an agency required prospectus. This was finally and effectively challenged by the regulatory agency in the middle of June 3, 2022. As a result of the same, Juicy Fields was prohibited from offering the “investment” in Germany.
Even earlier than that, as of February 25, 2022, the website www.tbbob.com announced that it suspected that Juicy was a scam as they were not registered in the Netherlands either.
On March 18, the company announced a partnership with two Danish cultivators – although claimed it was not yet in production – eight days after the Barcelona ICBC, and the infamous party with the Lamborghinis.
By May, El Diaro reported that the company was not registered in Spain either, and that the high returns had caught the eye of multiple regulators across Europe for promising as much as 120% annually.
While certainly there has been a failure of the regulatory agencies to keep up, and further, a decided lack of critical reporting from the cannabis press, it is likely that the second line of investigation in all of this will almost certainly be all of those, both individuals and others, who took money to promote the scheme, including via sponsorships.