Cannabis Industry Solution, Paragon’s Grieving Investors to Gain a Fraction of the $12M Lost

SEC announced its decision to distribute Paragon’s $175K, paid civil penalties to the 8K Investors
  • Paragon Coin Inc. managed to raise $12M from over 8,000 investors through its ICO in 2017.
  • Became the first crypto startup to receive SEC enforcement for an unregistered securities sale and was ordered to return the $12M with a $250K civil penalty.
  • Claiming bankruptcy, the firm only paid a $175K penalty, which the SEC will use to distribute among the 8K aggrieved investors.

Paragon Coin Inc., a to-be “decentralized solution for the cannabis industry”, made history when in 2018, it became the first crypto startup to receive the U.S. Securities and Exchange Commission (SEC) enforcement action stemming from its initial coin offering (ICO). The supposed blockchain solutions managed to raise $12 million through its ICO in 2017, but soon after, the cannabis project failed miserably, the company going bankrupt in April 2020. Now, the SEC is reportedly going to distribute the $175,000 Paragon paid in civil penalties to its aggrieved investors.

Paragon gains with 2017 ICO Boom

The ICO boom of 2017 brought in waves of investors, and one of the firms riding the waves was ParagonCoin. With Filecoin bagging $257 million, Tezos $232 million and Polkadot raising $145 million for their promising new blockchains, Paragon, in exchange for its PRG token, gained $12,066,000 from over 8,000 investors as of October 15, 2017.

Idea & Plans Behind Paragon

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Paragon was started by Jessica VerSteeg (CEO Paragon) and her husband Egor Lavrov (Chief Creative Officer Paragon) to bring blockchain solutions, promising greater transparency and cashless opportunity to the cannabis industry’s largely cash-based economy, as they can’t access traditional banking services due to federal regulations. 

Further, exerting an aggressive marketing strategy, it initiated its end. The firm soon fell under the SEC’s scrutiny, and in late 2018 became one of the first crypto startups to receive SEC enforcement for an unregistered securities sale during its ICO. Paragon was ordered to return investors’ funds, pay a $250,000 fine, and register PRG as a security if it wished to continue.

Bankrupt & In-debt: sunken ship & anguished passengers

Paragon filed to register PRG as security in March 2019, but claiming a net loss of $11 million in 2018, the firm expressed an inability to return investors’ funds. Even out of the $250,000 penalty charged, it only paid $175,000 to the SEC. Although the company pointed to the administrative expenses from its SEC battle to be one of the leading causes of loss, the stats showed an additional list of questionable expenditures, such as $463,000 to Lavrov for marketing services, and that did not sit well with the investors.

Late 2019 brought crowds of investors suing the firm, yet the company ignored the refund claims for their ICO. The 9th finishing duo of The Amazing Race’s 28th season was frequenting Europe, as seen in Versteeg’s Instagram posts. Being subjected to the backlash, the former model with an A+ social media game stopped posting, and the company altogether deleted its Telegram.

SEC – trying to cut consumer’s loss as much as possible

In April 2020, Paragon officially claimed bankruptcy, alleging they were “misguided” by their “highly recommended lawyers”, and even as they tried to do their best, most of their resources were exhausted in the “legal battles and compliance requirements.”

And now, as announced Saturday, the SEC is going to process the $175,000 that Paragon paid in civil penalties from the U.S. Treasury as “fair fund” to pay back the investors. And the firm is facing a civil suit.

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Steve Anderrsonhttp://www.thecoinrepublic.com
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.

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