UpToken ICO: SEC targets all parties involved, issues $3.9 million in fines
- The SEC has issued a cease-and-desist order against Coinme and its related entities for offering an unregistered and misleading crypto token.
- Coinme, its subsidiary Up Global Inc., and their founder and CEO Neil Bergquist have been fined up to $3.9 million.
The U.S. Securities and Exchange Commission (SEC) has issued a cease-and-desist order against crypto platform Coinme and its related entities for offering an unregistered and misleading token named UpToken, reported Reuters.
In connection with the case, Coinme, its subsidiary Up Global Inc., and their founder and CEO Neil Bergquist have been fined up to $3.9 million.
It was in 2017 that Coinme and Up Global held an initial coin offering (ICO) for the Ethereum [ETH]-based crypto asset UpToken in order to raise funding to extend Coinme ATM operations across the country.
According to the SEC, investors were persuaded to believe that Up Global would limit the supply of UpToken, whilst Coinme would create a constant demand for UpToken to fund a Bitcoin [BTC] automated teller machine incentives program, hence increasing the value of UpToken.
The regulatory body further claimed that Up Global and Bergquist misled investors by fraudulently claiming that the sale raised $10- $18.9 million, even when they knew it had raised barely $3.65 million.
Coinme and Up Global will pay $3.77 million without admitting or denying any wrongdoing, while Bergquist will pay a fine of $150,000. The amount of all the fines totals $3.9 million. Bergquist has also been barred from serving as an officer or director of a public company for three years.
Uptoken violated U.S. securities laws, claims SEC
According to the premier financial regulator, Uptoken was advertised and offered to investors as an investment contract, which is considered a security under U.S. financial rules; hence, all parties engaged in the ICO were accused of selling an unregistered security.
According to the SEC’s report, the commission has issued a cease-and-desist order to Coinme and Up Global, prohibiting both companies from participating in any coin offering indefinitely. All the parties have also agreed to destroy all UpTokens in their possession.
The SEC has been cracking down on cryptocurrency markets since Gary Gensler became its chair in 2021.
Gensler recently told the House Financial Services Committee (HFSC) that crypto markets were “rife with noncompliance” that put investors at risk and undermined public trust in capital markets.