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ICO issuer charged with fraud by SEC for selling unregistered security

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The US Securities and Exchange Commission (SEC) has accused Loci CEO John Wise of an unregistered sale of digital assets and defrauding investors.

The financial regulator posted a notice on its official website.

Loci received $ 7.6 million in an illegal token sale

According to a press release, between August 2017 and January 2018, Loci and John Wise personally received $ 7.6 million in the illegal sale of LOCICoin tokens. At the same time, Wise used more than $ 38,000 of the funds received for personal purposes. The Loci CEO accused of violating several clauses of the 1934 Securities Exchange Act and the 1933 Securities Act.

The SEC added that the LOCIcoins actually classified as securities, but the offer was not registered with the regulator.

The firm also promoted the InnVenn software platform, which it touted as “the ultimate asset management system”.

“Loci representatives and the company’s CEO misled investors about critical aspects of the business. Investors who invest in digital assets have the right to truthful and complete information about the company. So that they can make informed and informed investment decisions”, said Kristina Littman, head of the SEC’s cybercrime department.

At the moment, the SEC is receiving permission to familiarize itself with the remaining assets of the project, as well as to access all of its documentation.

Note that the firm neither acknowledged nor denied the findings of the Securities and Exchange Commission, but agreed to a cease and desist order. She also agreed to destroy the remaining tokens and demand that they be removed from trading platforms. The firm will post the SEC order on its social media. And refrain from participating in future digital asset securities offerings.

We also note that an order from the Securities and Exchange Commission imposes a civil fine of $ 7.6 million on Loci Inc and its CEO. Thus, the SEC demanded a full refund.

In the United States, the practice of SEC claims to startups is widespread several years after the ICO. Many other projects have also come under pressure from regulators years after the token sale.

One of the most high-profile cases related to the ICO held several years ago. In December 2020, broke out between the SEC and the California-based startup Ripple. The parties still cannot resolve the conflict.

According to a recent report by blockchain analyst firm Elliptic, the Securities and Exchange Commission is leading other U.S. regulators in the fight against cryptocurrency abuse. Mostly in the form of unregistered securities.

Elliptic has estimated at $ 1.38 billion the amount of the SEC penalties related to the unregistered sale of securities. The figure includes all such episodes from 2014 to May 2021.

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