It has been a while since my last blog post, and much has transpired.
To recap, The Humane Society of the United States (HSUS) accused Pembient of violating the Washington Animal Trafficking Act in February. This offense allegedly arose from Pembient's presale of biofabricated horn via an Initial Coin Offering (ICO) late last year. In hopes of exonerating Pembient, I met with detectives from the Washington State Department of Fish and Wildlife (DFW) on February 28th. I thought everything was resolved, but as it turned out, I was wrong.
Fast forward to March 27th, when I received a letter from the Washington State Department of Financial Institutions (DFI). The letter expressed a concern that Pembient might have sold unregistered securities in the State of Washington. In other words, there was a new reason to doubt the legality of Pembient's ICO. For those unfamiliar with the seriousness of the situation, the letter helpfully added that the company could face "administrative, civil, and criminal sanctions." It also instructed me to provide a full accounting of the ICO by April 17th. Of course, I immediately complied.
In response, I argued that PembiCoins, the blockchain tokens on offer, should not be considered securities. More specifically, they were not designed to fund Pembient's research and development efforts, but to cover the cost of a pilot run of biofabricated horn. A PembiCoin would allow its holder to take delivery of one gram of the pilot batch in 2022, nothing more, nothing less. The ICO, then, was similar to a product crowdfunding campaign, except Pembient recorded customers' pledges on a public blockchain instead of a private database. Alternatively, it was like buying a ticket to a future event, purchasing an unbuilt condominium unit, or even pre-ordering a Tesla. I concluded by noting that such transactions were not uncommon, nor did they require registration with the DFI.
Meanwhile, I became increasingly concerned that HSUS was behind this latest inquiry. To find out, I submitted a public records request to the DFI. Much to my surprise, it revealed that the Washington State Attorney General's Office (AGO) had triggered the DFI's probe! However, a subsequent records request, this time to the AGO, returned an email containing a copy of the accusations HSUS originally sent to the DFW. Hence, my suspicion was confirmed: HSUS's influence percolated up from the DFW to the AGO on February 22nd and then down to the DFI on March 8th, resulting in two parallel investigations into Pembient - one by the DFW, detailed previously, and the other by the DFI. Even more worrisome was that the author of the aforementioned email, an assistant attorney general, had written that "prosecution of operations like this one [Pembient] will require some carefully thought‐through legal analysis." Why were the authorities trusting the assessments of HSUS, an organization that once settled a $16 million racketeering lawsuit? What if HSUS was intentionally making false and misleading statements about Pembient in contravention of Washington State law (i.e., RCW 9A.76.175)?
Putting aside those questions, I went back to work. Months passed, and Pembient labored under a cloud of uncertainty. During this time, the stigma of being investigated hampered Pembient's ability to raise capital, capital it needed to refine its prototypes and scale up production.
Things finally culminated with the DFI inviting me to an in-person interview, which I scheduled for June 28th. Naturally, I was apprehensive going into the meeting, but it was surprisingly fun. The investigators asked good questions as I took them through the mechanics of PembiCoin. Additionally, we all lamented the imprecision of the term "ICO." Almost three weeks later, on July 17th, the DFI closed its investigation, with no action being taken against Pembient. Ironically, throughout this whole ordeal, there was no evidence of any customer complaints levied against the company.
So, what is the current status of the PembiCoin ICO? It has technically ended and is in a paused state pending the activation of an account at a cryptocurrency exchange. Unfortunately, the exchange that Pembient is working with is experiencing significant delays in verifying accounts due to a backlog of applications. There is a good chance, barring further harassment, that the account will be opened and PembiCoins issued before the one-year anniversary of the completion of the ICO. If you've been waiting to receive PembiCoins, I thank you for your patience.