Editor's note: This blog has been updated to include comments from EF Hutton CEO Chris Daniels, who could not be reached prior to its original publication.
"When EF Hutton talks, people listen ... and make coin."
That is the catch phrase EF Hutton is using in its latest attempt at a comeback, this time as a fintech company trading in everyone's favorite buzzword — cryptocurrency.
The company using the 114-year-old brokerage's name plans to launch MeggaCoin on Oct. 1 in an effort to raise a
reported $60 million for its parent company, HUTN Inc.
MegaCoin users will pay a one-time $5 fee to set up an EF Hutton account, then will receive MeggaCoins for the time they spend using a variety of MeggaLife social media apps. If users bank 20 million coins, they can redeem them for cash held by MeggaTrust, "an independent
trust that is overseen by independent third-party trustees," according to a press release. The funds in MeggaTrust consist of advertising revenue generated by the social media apps.
EF Hutton CEO Christopher Daniels clarified to
InvestmentNews that
HUTN is not issuing an initial coin offering or selling MeggaCoin over an exchange. It is purely a store of value, representing each user's share in MeggaLife's advertising revenue. If the platform takes off, that share could be worth of "10s of 1,000s of dollars," Mr. Daniels said.
The firm also plans to publish research on cryptocurrencies and companies involved in digital assets to help investors sort through this emerging and increasingly complex market, he added.
Mr. Daniels said HUTN will publish a white paper in the comings weeks that will make the economic case for MeggaCoin clear.
"When you see that, you'll see that it's not like anything else that anyone has done before," he told
InvestmentNews.
"MeggaCoin has the potential to transform lives," Mr. Daniels said in a statement. "Everyone now has a choice. Either give your data to the giant social media companies for free or use MeggaLife to mine MeggaCoin and bank the full value of your social data and online social activity."
The trustees allegedly include "the former head of the social security administration under President Obama." Oh, and the "double g" in Megga is because the products are "double good."
Woof.
It's a lot to take in, especially from a company that at one time was one of the largest and most respected brokerages in the country.
After
Citigroup sold its ownership of the brand in 2008, a group of EF Hutton alumni led by Frank Campanale
tried to resurrect the brand in 2012. Mr. Campanale
abandoned those plans just 18 months later in favor of trying to revive Lebenthal & Co. Those plans also faltered.
Mr. Daniels said Mr. Campanale is not an investor in EF Hutton or the MeggaCoin venture, and is not involved with the firm in any way.
The EF Hutton brand went public in 2014, trading on over-the-counter markets at HUTN. According to its
website, HUTN is the parent company of EF Hutton Inc., which offers digital, no-commission stock and option trading, and EF Hutton Investments LLC, an investment adviser firm. There's also Vibrant Mobility, a "mobile communications services provider," and Megga.
The latest incarnation of the brand is trying to join a cryptocraze that's showing serious signs of fatigue, with the price of bitcoin down by two-thirds from its peak. Gone are the days when penny stocks that rebranded to anything crypto saw prices double or triple. ICOs last month raised the smallest amount since May 2017 and half of all ICOs failed after just four months.
HUTN shares closed up 7 cents at 77 cents Tuesday in over-the-counter trading. The stock has averaged 61 cents over the past year and trades an average 3,000 shares a day.
The announcement from EF Hutton was the firm's third this month, following releases on its plans to start a crypto exchange and subscription-based research. EF Hutton has "special insight and experience in the cryptocurrency market," the latest press release said, citing the research and a social media app for mining coins. The link provided to the research did not work.
EF Hutton is attempting its MeggaCoin plan as regulators are clamping down on some cryptocurrency ventures. Last week, the
Financial Industry Regulatory Authority Inc.
charged a former broker for distributing "HempCoin" as a means to lure investments into his public company. The SEC also
charged a cryptocurrency
hedge fund for violating securities law.
This story includes reporting from Bloomberg News.
