SEC Charges Issuer for Conducting Fraudulent and Unregistered Digital Asset Security Offering

Litigation Release No. 25157 / August 4, 2021

Securities and Exchange Commission v. Uulala, Inc., Oscar Garcia, and Matthew Loughran, No. 5:21-cv-01307 (C.D. Cal. filed August 4, 2021)

The Securities and Exchange Commission today announced settled charges against Uulala, Inc., and two of its California-based founders, Oscar Garcia and Matthew Loughran for allegedly defrauding more than a thousand investors in an unregistered offering of digital asset securities that raised more than $9 million and against Uulala and Garcia for allegedly engaging in a second fraudulent offering of convertible notes.

The SEC's complaint, filed in the United States District Court for the Central District of California, alleges that, from December 2017 through January 2019, Uulala sold UULA tokens, which were allegedly to be used to record transactions in a financial application ("app") that Uulala was developing and promoting to those without access to traditional banking services. According to the SEC's complaint, Uulala, Garcia, and Loughran made materially false and misleading statements to investors throughout their offering of UULA about having "patent pending" technology that had been incorporated into their app and having a proprietary algorithm to assign credit scores to users of their app. The complaint further alleges that Uulala and Garcia then made materially false and misleading statements about Uulala's financial performance in the convertible notes offering. The SEC also alleges that Uulala did not register its offers and sales of UULA tokens with the Commission.

The SEC's complaint charges Uulala and Garcia with violating the registration and antifraud provisions of Sections 5 and 17(a) of the Securities Act of 1933 ("Securities Act") and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. Loughran is charged with violating Section 5 and Section 17(a)(3) of the Securities Act. Without admitting or denying the allegations, Uulala, Garcia, and Loughran each consented to final judgments ordering injunctive relief and undertakings aimed at permanently disabling the UULA and EUULA tokens and removing them from digital asset trading platforms, and the payment of civil penalties in the amount of $300,000 as to Uulala, $192,768 as to Garcia, and $50,000 as to Loughran.

The SEC's investigation was conducted by Jasmine M. Starr and supervised by Victoria A. Levin.