In conjunction with his promotion of an unregistered ICO project, a singer from the United States is facing a $12 million penalty in a California court. Jayceon Taylor, better known by his stage name The Game, pushed ParagonCoin, a blockchain initiative that claimed to be changing the cannabis industry. However, it has subsequently collapsed due to legal fights, and its founders have claimed bankruptcy and fled the United States.
During the unprecedented ICO boom of 2017, ParagonCoin was one of many ICO initiatives that sprouted up. It went after the marijuana market, stating that its PRG tokens would become the sector’s preferred payment method. The project allegedly raised $12 million from investors in its August 2017 ICO by selling PRG tokens. As a result, the project was investigated by the Securities and Exchange Commission (SEC) for potential securities breaches, and investors sued ParagonCoin’s founders and team members.
Taylor was one of the investors that sued the company’s founders three years ago. However, the plaintiffs could not prove that he was a part of the ParagonCoin team or an employee. Thus the court dismissed him.
On the other hand, Taylor is now facing a similar verdict to the founders, according to an additional complaint filed by Astley Davy, one of the investors. As a result, the rapper should be included in the judgment, according to Judge Jeffrey White.
“…the Court is persuaded the allegations are sufficient to show that Taylor acted for his own gain or for Paragon’s gain and, thus, could be considered a statutory seller,”Judge White ruled.
In his updated case, Davy, who represents the other investors, claimed that ParagonCoin used The Game as a celebrity advocate to recruit investments.
The complainant also claimed that the rapper would be deemed a team member, claiming that the ParagonCoin white paper specified that the rapper would be considered a team member.
“‘[f]ounders and team members’ would be prohibited from ‘liquidating’ more than 20% of their PRG Tokens in the first calendar year, as this would ‘keep a stable token price’ and ‘keep their interests aligned with the Paragon community.'”
The Grammy-nominated rapper is now accountable for $12 million in damages, plus interest accrued before and after the verdict. He now faces the same fate as the project’s founders, Jessica VerSteeg and Egor Lavrov, a celebrity couple.
ParagonCoin claimed on its website that its lawyers’ erroneous legal advice caused its securities violations.
“We did our best to launch the product, but most of our resources were allocated to legal battles and compliance requirements,”the company stated.
The team then goes on to say that it has declared bankruptcy.
According to some stories, the two founders have been unresponsive for several years. They are said to have fled the United States and were last spotted in Kiev, Ukraine.