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The Securities and Exchange Commission (SEC) continues to crack down on blockchain and cryptocurrency-based projects – and is gaining some money in the process.
Some first examples
Two of the biggest problems we are witnessing in cryptographic space are about false initial money offerings (ICOs) and fundraising efforts and companies that apparently do not register properly. The SEC renewed its attack on both in 2018.
One of the most recent cases concerns Snapchat king DJ Khaled and boxing legend Floyd Mayweather Jr. for their alleged roles in the CentraTech scam. The company would have produced cryptocurrency-based products, but many of its executives were arrested in early April after they were thought to have lied to investors about products associated with mega-bank partners such as Visa, MasterCard and Bancorp.
In addition, executives also said they hold 38 money transmission licenses and an advisory board – two statements that prosecutors believe are untrue.
Celebrities can not hide behind Crypto
Meanwhile, both Khaled and Mayweather agreed to be celebrity spokesmen for the company. Both were charged with the ongoing fraud case and Mayweather agreed to pay the SEC about $ 300,000 in disgorgement, along with a fine of $ 300,000 and $ 14,775 in injury interest. Khaled will give the organization $ 50,000 in disgorgement, $ 100,000 in penalties and $ 2,725 in injury interest.
Another case occurred at the beginning of July 2018. The SEC filed a lawsuit in New York against UBI Blockchain Internet, Ltd. for selling shares subject to restrictions well above their permitted market prices. The defendants were forced to return about $ 1.4 million to their investors and to pay over $ 188,000 in SEC sanctions.
The list continues
In September, the SEC turned to Crypto Asset Management, LLC, arguing that the company had misrepresented it as the "first regulated regulated capital in the United States". The executives subsequently agreed to pay the SEC over $ 200,000 in penalties.
One of the most important cases is TokenLot LLC, also in September. As an unregistered broker, the company has inappropriately handled thousands of ICO investor orders. The executives were forced to pay over $ 470,000 in disbursement expenses, along with injury interest of around $ 7,929. Both founders of the company also suffered civil penalties for around $ 45,000 each.
Finally, both AirFox and Paragon Coin have agreed to pay over $ 250,000 each in penalties after failing to register their ICOs as titles.
Cases like this occur due to malicious activity or lack of education and knowledge? Post your comments below.
Images courtesy of Shuttershock.
