THE Securities and Exchange Commission (SEC) has advised the public that Skyline Crypto and Dry Goods Trading is not authorized to solicit investments following reports that the latter has been promising unrealistic returns for "locked in" investments.
The regulator said that certain individuals claiming to represent Skyline Crypto were "offering investment opportunities online through Facebook Messenger group chats" and promising a return of 35 percent on their investments, ranging from P1,000 to P1 million "in a short span of 15 days."
The entity is also said to be offering a lock-in program promising smartphones and various motor vehicles as "rewards."
Under the Securities Regulation Code (SRC), an investment contract is characterized by the investment of money in a common enterprise with the expectation of profits primarily derived from the efforts of others.
The SRC also requires that the offer or sale of such securities must be registered with the SEC, and the entity and its agents offering such investment contracts or securities must have the appropriate registration and/or licenses to sell such securities to the public.
The SEC's database showed that Skyline Crypto and Dry Goods Trading was not registered as a corporation or partnership and lacked the necessary licenses and authority to solicit investments from the public.
The regulator added that the scheme employed by the company was similar to that of a Ponzi scheme, where returns to earlier investors are paid from the contributions of new investors.
"The offering and selling of securities in the form of investment contracts using the 'Ponzi scheme,' which is fraudulent, is not a registrable security," the regulator said.
In addition, the SEC noted that the Financial Products and Services Consumer Protection Act (FCPA) explicitly prohibits investment fraud, including Ponzi schemes, which involve deceptive solicitation of investments from the public.
Offering or selling such investment schemes to the public without an SEC license also constitutes investment fraud under the law.
The SEC has, therefore, advised the public to refrain from investing in Skyline Crypto and Dry Goods Trading or any similar entities.
It added that individuals acting as salesmen, brokers, dealers, or agents of the company, and those soliciting or recruiting investors, may face criminal charges under the FCPA and the SRC and could face penalties of up to P5 million or imprisonment of up to 21 years, or both.