SEC Issues Cease-And-Desist Order, Fines All Parties Involved In UpToken ICO
The U.S. Securities and Exchange Commission (SEC) has issued a cease-and-desist order against crypto exchange giant Coinme and its business subsidiary Up Global Inc. for conducting an unregistered and disingenuous coin offering of the cryptocurrency UpToken. In addition, both companies, along with their founder and CEO, Neil Bergquist, have been ordered to pay fines summing up to a total of $3.9 million.
The Case Against Coinme And Related Defendants
Back In 2017, Coinme and Up Global conducted an initial coin offering for the Ethereum-based asset UpToken with the aim of raising funds to expand Coinme ATM operations across the country.
According to Friday settlement’s report by the SEC, the ICO generated a sum of $3.65 million, part of which was used to deploy 30 new Coinme ATMs, with the remainder being directed to other corporate purposes.
However, the U.S. financial regulator stated that Uptoken was marketed and sold to investors as an investment contract and is considered a security under U.S. financial laws; thus, all parties involved in the ICO were accused of selling an unregistered security.
Furthermore, the SEC report also stated that Up Global and Bergquist had falsely informed the potential investors about limiting the supply of UpToken and that Coinme would constantly be in need of UpToken to fund their ATM rewards program, which would lead to an increase in the asset’s price in the long run.
Unknown to unsuspecting investors, the SEC reports that the firms behind UpToken had taken steps to acquire a substantial amount of the asset before the ICO began and throughout the entire process. These steps included an internal transaction between Coinme and Up Global as well as a roundtrip transaction involving a Hong Kong-affiliated company.
Finally, the SEC report also revealed that Coinme and related parties had misled the public, claiming a total of $18.5 million had been raised from the ICO in contrast to the original amount of $3.65 million. All these accusations above were levied against Coinme, Up Global, and Bergquist by the SEC, and all parties came to a settlement.
SEC Places Ban On Coinme And Up Global, Imposes $3.9-M Fine
According to the SEC’s report on Friday, the commission has placed a ban on Coinme and Up Global via a cease-and-desist order, restraining both parties from participating in any coin offering indefinitely.
Meanwhile, Bergquist, as an individual, is also banned from participating in ICOs, albeit for only three years. In addition to this, all parties also signed an undertaking to destroy all UpToken in their possession.
Finally, the defendants have been ordered to pay a fine, however, of varying amounts. Coinme and Up Global will pay a civil money penalty of $250,000 and $3,520,000 respectively. Meanwhile, Bergquist will pay $150,000, bringing the total fine to $3.9 million.
That said, the crypto market remains the thrill of the global financial system, with a total market value of $1.171 trillion.
Total Crypto Market valued at $1.171| Source: TOTAL Chart on Tradingview.com
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