InfoBytes Blog
SEC settles cryptocurrency fraud case for $10.1 million
On August 29, the SEC announced it had settled with a cryptocurrency company and its two founders to resolve allegations that the company defrauded investors and operated an unregistered exchange. The SEC’s complaint alleges that the defendants raised more than $13 million from investors through the sale of digital tokens without registering the offerings with the SEC. According to the complaint, the defendants misrepresented that purchasers of digital tokens would receive stock in the company, as well as obtain access to a global marketplace attracting millions of consumers, despite the fact that the latter did not exist. This led to investors allegedly losing more than two-thirds of their investments in the company, the SEC claims. The company also allegedly operated an illegal, unregistered national security exchange offering trading in a single security. The SEC’s press release states that, while the defendants neither admit nor deny the allegations, the company will pay disgorgement, prejudgment interest, and a civil penalty of approximately $8.4 million, while the two founders will each pay more than $850,000.