• 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 deceptive coin offering of the cryptocurrency UpToken.
• The ICO generated $3.65 million, part of which was used to deploy 30 new Coinme ATMs, with the remainder going towards other corporate purposes.
• Both companies, along with their founder and CEO Neil Bergquist, have been ordered to pay fines totaling $3.9 million for selling an unregistered security and for misleading investors about their actions surrounding UpToken’s supply and pricing.
Overview of Cease & Desist Order
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., along with their founder and CEO Neil Bergquist, for conducting an unregistered initial coin offering (ICO) of the cryptocurrency UpToken in 2017. The SEC has also imposed a total fine of $3.9 million on the defendants as per settlement terms agreed upon by both parties involved in the case.
Details Of Unregistered Security
The SEC alleges that UpToken was marketed as an investment contract to investors, making it a security under U.S financial laws; therefore, all parties involved in the ICO are accused of selling an unregistered security without complying with any regulations or filing any necessary paperwork prior to launching their token sale event.
Misleading Claims About Supply & Price Appreciation
In addition to this violation, the SEC states that Coinme, Up Global, and Berquist falsely informed potential investors about limiting the supply of UpToken while claiming that Coinme would need more tokens for funding its rewards program at ATMs across the United States – both claims were false according to SEC investigations into this matter.
Acquisition Of Tokens By Defendants
Investors were unaware that during this time period, these firms had taken steps to acquire substantial amounts of tokens before launching the ICO as well as throughout its course – including engaging in internal transactions between Coinme & Up Global as well as roundtrip transactions involving a Hong Kong affiliated company..
Falsely Claimed Fundraising Amounts
Furthermore, Coinme & related parties had misled investors by claiming they raised $18 million from their ICO when they actually only raised $3.65 million – making money off unsuspecting investors who bought into false promises made by these entities..