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The US SEC fined and issued a cease-and-desist order against crypto exchange Coinme and its subsidiary, Up Global Inc., for conducting an unregistered and misleading ICO of a crypto asset called UpToken.
The United States Securities and Exchange Commission (SEC) announced it issued a cease-and-desist order against Bitcoin ATM operator Coinme and its business subsidiary Up Global Inc. for conducting an unlawful ICO (initial coin offering) of the crypto asset UpToken. Coinme, Up Global and the companies’ founder and CEO, Neil Bergquist, have been ordered to pay fines amounting to $3.9 million.
Coinme and Up Global undertook an ICO in 2017 for the Ethereum-based asset UpToken to generate funds to expand Coinme ATM operations across the US.
The SEC’s settlement report indicated the ICO generated over $3.65 million. Part of the funds was supposed to fund 30 new Coinme ATMs, and the remainder would be used for other corporate purposes. However, the SEC said investors were duped into believing Up Global would limit UpToken’s supply while Coinme would generate constant demand for the token to finance a bitcoin ATM rewards program which would, in turn, boost UpToken’s price.
The regulator says, however, that UpToken was promoted and sold to investors as an investment contract and is thus considered a security according to US financial laws. All parties involved in the offering have accordingly been accused of selling an unregistered security.
The SEC finally revealed that Coinme and its affiliates misled the public, claiming the ICO raised $18.5 million, in contrast to $3.65 million.
Coinme, Up Global, and Bergquist Settle with the SEC
The SEC levelled accusations against all three parties involved in the UpToken ICO, and all parties settled.
Following the settlement, the SEC issued a cease-and-desist order against Coinme and Up Global, prohibiting them from indefinitely participating in any coin offering. In his personal capacity, Bergquist has been banned from participating in ICOs for three years.
Coinme and Up Global have been ordered to pay civil money penalties of $250,000 and $3,520,000, respectively, while Bergquist will pay a fine of $150,000.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.