Colorado authorities halt ‘Linda Health Coin’ ICO
Securities regulators in the U.S. state of Colorado has issued a cease and desist order halting the initial coin offering (ICO) of Linda Health Coin (LNDA), which they deemed an unregistered security.
According to the Colorado Department of Regulatory Agencies (DORA), Florida-based Linda Healthcare Corporation and its founder, Arturo Devesa, were ordered to stop selling LNDA token, which was advertised for use in purchasing “specific ‘Linda Health Insurance’ covering telemedicine through an artificial intelligence chat services that creates medical solutions through use of blockchain technology.”
State regulators, however, pointed out that potential buyers of the token were “not provided disclosures of the risks of investing in cryptocurrency,” saying a pop-up on the company’s website stating that the ICO constitutes a security in Colorado “can be closed and easily ignored.”
The Colorado Division of Securities launched an investigation on LNDA coin in May, a month after it was made aware of the project’s site.
Devesa claimed the token sale was more of a crowdfunding campaign than a profit-share offering, but according to Colorado Administrative Law Judge Matthew Norwood, Linda Healthcare’s campaign fell under the classification of an “investment contract.”
In his ruling, 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 promoter or third party.”
In a statement, Colorado Securities Commissioner Gerald Rome said: “ICOs are highly risky and should only be undertaken by sophisticated investors with the understanding that they may lose most or all of their funds.