InfoBytes Blog
SEC charges companies and executives for operating an unregistered exchange
On March 29, the SEC filed a complaint in the U.S. District Court for the Northern District of Illinois against a cryptocurrency trading platform and its executives for allegedly failing to register as a national securities exchange, broker, and clearing agency. The SEC also claimed the founder of the platform used it to raise $8 million in an unregistered token offering and misappropriated at least $900,000 for personal use. Additionally, the SEC charged certain defendant “market makers” operating on the platform as unregistered dealers. The complaint flagged certain defendants as being responsible for maintaining and providing the platform that facilitated the crypto assets that were offered and sold as securities and cited other defendants for operating as an unregistered exchange, broker, and clearing agency or as unregistered dealers.
According to the SEC’s announcement, some of the defendants—without admitting or denying the allegations—“have agreed to perform certain undertakings, including ceasing all activities as an unregistered exchange, clearing agency, broker, and dealer; shutting down the [platform]; providing an accounting of assets and funds for the benefit of customers; transferring all customer assets and funds to each respective customer; and destroying any and all [tokens] in [one of the defendant company’s] possession.” These defendants have agreed to permanent injunctions prohibiting them from engaging in future securities law violations and will pay civil penalties collectively totaling $165,800. Two of these defendants have also agreed to pay a combined amount of $62,779 in disgorgement and prejudgment interest. The SEC said it is continuing to litigate its charges against other defendants for securities fraud and for offering unregistered tokens.