The U.S. Securities and Exchange Commission (SEC) has levied a gargantuan fine of approximately $4 million on Coinme, a company based in the heart of Seattle. In addition, the finanical watchodg has charged a few other defendants related to the case, for engaging in an unregistered and fraudulent marketing of a cryptocurrency asset called UpToken.
SEC Charges Yet Another Crypto Firm
Charges that claimed Coinme’s Up Global division and Neil Bergquist — who oversaw both the companies — and deceived investors in a 2017 Initial Coin Offering (ICO) for an Ethereum-based UpToken, were resolved in an unambiguous settlement announced on Friday.
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According to the SEC, investors were allegedly persuaded to believe that Up Global would set a hard cap of the total supply of UpToken, while Coinme would generate consistent demand for the token “to fund a Bitcoin automated teller machine” incentives program, which would thereby boost the price of the token.
The regulatory body believed that the assertions were deceptive due to the fact that Up Global had secretly carried out transactions that lowered Coinme’s requirement for UpToken. Moreover, according to the SEC report, Up Global and Bergquist had lied to investors by stating that the offering had raised $10 million to $19 million when in reality they had raised far less money, roughly close to $3.65 million.
SEC Imposes Hefty $4 Mn Fine
Coinme and Up Global will pay a combined $3.77 million, while Bergquist will pay $150,000. However, neither party has admitted nor denied any misconduct in connection with this matter. Bergquist, the 35-year-old crypto entrepreneur, was also given a prohibition against serving as an officer or director of public enterprises for a period of three years.
While speaking about the new development, the SEC was quoted as saying:
Based on the facts and circumstances set forth below, UpToken were offered and sold as investment contracts and therefore securities under SEC [guidelines]. An UpToken investor would have had a reasonable expectation of obtaining a future profit from the rise in value of UpToken based upon Respondents’ efforts.
The incident comes on the heels of rampant crypto crackdowns which many businesses operating in the country have witnessed in recent times. As of late, the financial regulator has been making a concentrated effort to address what it sees as a lack of compliance on the side of cryptocurrency platforms and the intermediaries that work with them.
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