Coinme Fined $3.9M by SEC for Misleading ICO

• 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 for their actions.
• The SEC reports that Coinme and related parties had misled the public about the amount raised from the ICO which was $3.65 million rather than what they reported being $18.5 million.

Background

In 2017, crypto exchange giant Coinme and its business subsidiary Up Global Inc conducted an initial coin offering (ICO) 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; however, Uptoken was marketed and sold to investors as an investment contract and is considered a security under U.S. financial laws; thus, all parties involved in the ICO were accused of selling an unregistered security.

Misleading Conduct

The SEC report also stated that Up Global and Bergquist had falsely informed potential investors about limiting the supply of UpToken as well as claiming that Coinme would constantly be in need of UpToken to fund their ATM rewards program; this would lead to an increase in the asset’s price in the long run – something which was unknown to unsuspecting investors at this time. Additionally, Coinme and related parties misleadingly claimed a total of $18.5 million had been raised from the ICO rather than what it actually was – $3.65 million – leading them further into trouble with authorities who are responsible for maintaining integrity within financial markets in America .

Cease & Desist Order

As a result of these accusations levied by The SEC against Coinme, Up Global, and Bergquist came Friday settlement’s report which proposed that all entities involved face paying fines summing up to a total of $3.9 million as punishment for their conduct during this period..

Conclusion

This case serves as an example for other crypto businesses that are looking into launching token offerings or engaging in any type of activity related to digital assets without properly registering them with securities regulators beforehand since it will likely lead them into trouble if they fail do so accordingly .

Takeaway

It is important for companies operating within cryptocurrency space abide by rules set by regulators such as The SEC when it comes to offering tokens or engaging with digital assets even if they are not securities; failure doing so can lead them into serious legal trouble regardless if they intended on misleading people or not .