SEC Charges another Crypto Firm for Illegal Securities Sale; Demands $50,000 Fine

The United States Securities and Exchange Commission (SEC) on Friday began cease-and-desist proceedings against crypto investment firm CoinAlpha Advisors LLC for selling unregistered securities. Through the cease-and-desist order, the SEC demanded that the firm stop its activities and pay a penalty of $50,000.

The Offence

The U.S. securities regulators claimed that CoinAlpha failed to register its business with the commission yet went ahead to receive fund for investments in crypto assets contrary to the law implemented by of the commission. It received a total of $608,491 in the Fund from 22 accredited investors.

According to SEC’s statement, CoinAlpha applied for a for a distribution license exemption last year but did not fulfill the criteria neither was it given an exemption.

SEC stated:

“Respondent filed a Form D Notice of Exempt Offering of Securities with the Commission on November 3, 2017,” the SEC order read. “CoinAlpha did not file or cause to be filed a registration statement with the Commission, and no exemption from registration was available for the securities offering during the Relevant Period.”

The Commission further explained that CoinAlpha actively solicited for investments from formerly unknown investors through advertisement channels including website information, blog posts, interviews and blockchain conferences, and events. The investment firm also received management fees and other incentives for the fund it created.

SEC also argued that

The Penalty

The commission issued a two-fold punishment on CoinAlpha after investigating is wrongdoing. Firstly, it ordered the Fund to immediately cease and desist from its operations which were “committing or causing violations”. Secondly, CoinAlpha were made to pay penalty in the amount of $50,000 to the commission within 10 days of the notice.

CoinAlpha has agreed to the order by the commission and is cooperating with it though it did not accept or deny the charges. SEC noted that the firm immediately stopped the offering when contacted by the Commission staff and undertook a review of its website, social media postings, digital asset and blockchain conference marketing materials, and offering procedures. It also refunded all the investment and fees it had received from all 22 investors, ensuring none suffered a loss.

SECs Efforts against Illegal Crypto Activities

The securities regulators have ramped its crackdown on crypto-related defaulters in the past couple of months. In a bid to sanitize the space which has been laden with scams in the past, SEC said it in its report that it had placed ICO-related scams high on its priorities with a “focus on main street investor”.

As Smartereum reported, the SEC charged the Zachary Coburn, the founder of crypto token trading platform EtherDelta of operating an unregistered securities exchange. The commission alleged that EtherDelta was serving as a marketplace that allowed buyers and sellers to trade ethereum tokens that the SEC considered to be digital asset securities. The operator agreed to pay $300,000 in disgorgement and $13,000 in pre-judgment interest as well as a penalty of $75,000. Since then the commission has penalized Boston-based ICO CarrierEQ, and celebrities DJ Khaled and Floyd Mayweather for illegally promoting ICOs.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.