- 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.
- The organizations were accused of 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.
A Cease-and-Desist Order Against Crypto Exchange Giant Coinme
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.
Coinme And Up Global’s Initial Coin Offering Of Ethereum Asset UpToken
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. The ICO generated a sum of $3.65 million which was used to deploy 30 new Coinme ATMs while the remainder was directed towards other corporate purposes.
Accusations Of Selling Unregistered Security & Misleading Investors
However, the U.S financial regulator stated that Uptoken was marketed and sold as an investment contract which is considered a security under U.S financial laws; thus all parties involved in the ICO were accused of selling an unregistered security without informing investors about limiting the supply or falsely claiming a higher amount raised than originally intended ($18.5 million). Additionally, it was discovered that firms behind UpToken had taken steps to acquire a substantial amount before the ICO began throughout its entire process involving internal transactions between them as well as one involving a Hong Kong affiliated company .
Penalties Imposed On All Parties Involved
All these accusations above were levied against Coinme, Up Global and Bergquist by SEC resulting in all parties coming to settlement involving paying fines totalling up to $3.9 million dollars as penalty imposed on them by SEC .