The Financial Industry Regulatory Authority (FINRA) has charged a Massachusetts resident with securities fraud for an unregistered token sale in a first for the self-regulatory organization (SRO).

Ayre allegedly sold unregistered securities in the form of the HempCoin token, which was said to represent an investment in his “worthless” company, Rocky Mountain Ayre (RMTN). FINRA announced the charges on Tuesday, adding that it filed a legal complaint against Ayre for misleading investors as well.

HempCoin was claimed to be “the first minable coin backed by marketable securities,” according to promotional materials tied to the token sale. Ayre also contended that HempCoin was “the world’s first currency to represent equity ownership.” However, the token was never registered as a security and Ayre failed to apply for an exemption, according to FINRA.

Ayre first acquired the rights for HempCoin in June 2015. Investors mined or traded the token on two different cryptocurrency exchanges through October 2017, the FINRA’s statement claims. The company’s common stock was also traded publicly in an over-the-counter (OTC) market.

“In addition, FINRA alleges that, from January 2013 through October 2016, Ayre defrauded investors in RMTN by making materially false statements and omissions regarding the nature of RMTN’s business, failing to disclose his creation and unlawful distribution of HempCoin, and making multiple false and misleading statements in RMTN’s financial statements,” FINRA added in its statement.

Ayre has the chance to defend himself in front of a disciplinary panel if he chooses to respond to the claims. If he is found guilty, he may be fined, censured, suspended or permanently barred from the securities industry, as well as forced to pay restitution for damages.

Though Tuesday’s announcement marks the first time FINRA has taken action against a cryptocurrency broker, the SRO said earlier this year that it would begin collecting information about such activities from its members.

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