UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934 

Release No. 91522 / April 9, 2021

ADMINISTRATIVE PROCEEDING 

File No. 3-18897

In the Matter of

PARAGON COIN, INC., 

Respondent.

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ORDER ESTABLISHING A FAIR 

FUND

On November 16, 2018, the Commission issued an Order Instituting Cease-and-Desist 

Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and 

Imposing Penalties and Cease-and-Desist Order (the “Order”) against Paragon (“Paragon” or 

“Respondent”).1In the Order, the Commission found that between August 2017 and October 

2017, Paragon offered and sold digital tokens (“PRG tokens”) to be issued on a blockchain, or a 

distribution ledger (the “offering”) to raise capital to develop and implement its business plan to 

add blockchain technology to the cannabis industry and work towards legalization of cannabis. 

Paragon raised approximately $12 million worth of digital assets during the offering. A 

purchaser in the offering of PRG tokens would have had a reasonable expectation of obtaining a 

future profit based upon Paragon’s efforts, including to develop Paragon’s “ecosystem” using the 

proceeds from the sale of PRG tokens, and to take steps to control and increase the value of 

PRG. Paragon violated Sections 5(a) and 5(c) of the Securities Act of 1933 by offering and 

selling these securities without having a registration statement filed or in effect with the 

Commission or qualifying for exemption from registration with the Commission. 

In the Order, among other things, the Respondent undertook to register the PRG tokens as 

a class of securities; to distribute a notice and claim form notifying all eligible purchasers of their 

potential claims under Section 12(a) of the Securities Act, including their right to sue “to recover 

the consideration paid for such security with interest thereon, less the amount of any income 

received thereon, upon the tender of such security, or for damages if [the purchaser] no longer 

owns the security” and informing purchasers that they may submit a written claim directly to 

Respondent and that such claims must be submitted within three (3) months from the claim form 

deadline. 

 

1 Securities Act Rel. No. 10574 (Nov. 16, 2018). 
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In anticipation of Respondent’s compliance with the undertakings set forth in the Order, 

it was determined no further funds would be needed to fully compensate the harmed investors. 

Therefore, the $250,000 civil money penalty that the Commission imposed was ordered to be 

paid to the Commission for transfer to the general fund of the U.S. Treasury (“Treasury”), 

pursuant to the payment plan detailed therein.

Respondent defaulted on its obligation to perform a respondent-administered claims 

process under the terms of the Order, and to date, $175,000 of the civil money penalty has been 

paid and was sent to the Treasury in accordance with the Order. 

The Commission staff has determined that it is feasible to distribute the civil money 

penalty funds paid to date to compensate investors harmed by Respondent’s conduct described in 

the Order. Therefore, the Commission staff has taken the appropriate steps to recall from 

Treasury the $175,000 paid by Respondent. The Commission currently holds these funds in an 

interest-bearing account at the Treasury’s Bureau of Fiscal Service. 

The Division of Enforcement now recommends that a Fair Fund be established, pursuant 

to Section 308(a) of the Sarbanes-Oxley Act of 2002, for the civil money penalties recalled from 

Treasury and any additional funds paid by the Respondent, so the civil money penalty can be 

distributed for the benefit of the harmed investors.

Accordingly, IT IS HEREBY ORDERED that pursuant to Section 308(a) of the 

Sarbanes-Oxley Act of 2002, as amended by the Dodd-Frank Act of 2010 [15 U.S.C. §7246], a 

Fair Fund is established for the $175,000 in recalled funds, and any future funds paid by 

Respondent, so the civil money penalty paid by Respondent can be distributed for the benefit of 

harmed investors.

By the Commission.

Vanessa A. Countryman

Secretary