Colorado Securities Commissioner, Gerald Rome, has issued a cease and desist order to Florida based Linda Healthcare Corporation and its founder, Arturo Devesa, halting the company’s initial coin offering (ICO) due to the token sale being deemed an offering of an unregistered security. The cease and desist is a reaffirmation of a previous ruling made in July by administrative Judge, Matthew Norwood.
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Linda Healthcare Corporation Issued Cease and Desist
The Colorado Department of Regulatory Agencies’ Division of Securities first became aware of Linda Healthcare Corporation’s “Linda Health Coin” (LNDA) in April.
A press release published by the Colorado Department of Regulatory Agencies states that the LNDA token was advertised to “be used to purchase specific ‘Linda Health Insurance’ covering telemedicine through an artificial intelligence chat services that creates medical solutions through use of blockchain technology.”
The release asserts that “Potential buyers of LNDA coin are not provided disclosures of the risks of investing in cryptocurrency and a pop-up that states that this particular ICO constitutes a security in the state of Colorado can be closed and easily ignored.”
LNDA ICO Determined to Comprise Securities Offering
The company claimed that it’s offering resembled a “crowdfunding campaign,” however, Judge Norwood found that the offering as detailed in the company’s white paper and website falls under the classification of an “investment contract.”
Judge Norwood determined that a “LNDA token is a security in that it meets all three prongs of the [Howey] test. It is 1) a contract, transaction, or scheme whereby a person invests his or her money in 2) a common enterprise and 3) is led to expect profits solely for the efforts of the
