The U.S. Securities and Exchange Commission has fined and issued a cease and desist order to cryptocurrency exchange Coinme and its subsidiary Up Global Inc. for conducting an unregistered and misleading ICO of a crypto asset called UpToken.
The U.S. Securities and Exchange Commission (SEC) announced issue a cease and desist order Illegal ICO (Initial Coin Offering) of the crypto asset UpToken against Bitcoin ATM operator Coinme and its business subsidiary Up Global Inc. Coinme, Up Global, and the company’s founder and CEO Neil Bergquist have been ordered to pay a combined $3.9 million in fines.
Coinme and Up Global have conducted a 2017 ICOs Fundraising for UpToken, an Ethereum-based asset, to expand Coinme ATM operations across the United States.
The SEC’s settlement report shows that the ICO generated more than $3.65 million. Part of the funds was supposed to finance 30 new Coinme ATMs, and the rest will be used for other corporate purposes. However, the SEC said that investors were duped into believing that Up Global would limit the supply of UpToken and that Coinme would generate continued demand for the token to fund the Bitcoin ATM rewards program, which in turn would drive up the price of UpToken.
However, the regulator said UpToken was promoted and sold to investors as an investment contract and therefore considered a security under U.S. financial law. As a result, all parties involved in the offering are accused of selling unregistered securities.
The SEC ultimately revealed that Coinme and its affiliates misled the public by claiming that the ICO raised $18.5 million instead of $3.65 million.
Coinme, Up Global and Bergquist Settle with SEC
The SEC filed charges against all three parties involved in the UpToken ICO, and all parties settled.
Following the settlement, the SEC issued a cease and desist order against Coinme and Up Global, barring them from participating in any token offerings indefinitely. Bergquist was personally banned from participating in the ICO for three years.
Coinme and Up Global have been ordered to pay civil penalties of $250,000 and $3,520,000, respectively, while Bergquist will pay a $150,000 penalty.
Disclaimer: This article is for informational purposes only. It does not provide or be intended to be used as legal, tax, investment, financial or other advice.
