The Securities and Exchange Commission (SEC) is targeting Coinme, a cryptocurrency ATM operator, in its fight against crypto companies in the United States. The SEC accuses Coinme for selling unregistered securities via its crypto ATMs and imposes a $4 million fine on the company and its founder and CEO, Neil Bergquist. The SEC also orders the destruction of all tokens in their possession.
4 million fine for unregistered security
The SEC, the U.S. Securities and Exchange Commission (SEC), the regulator of the U.S. financial markets, continues its fight against the crypto sector by targeting Coinme, a distributor of Bitcoin (BTC), its subsidiary Up Global Inc, and their founder Neil Bergquist. SEC accuses defendants of selling unregistered securities and lying about the token UpToken (Up). Although the defendants have neither confirmed nor denied the charges, the SEC has decided to crack down.
On April 28, the SEC announced that the charges had been dropped and that the defendants had agreed to pay a total fine of $3.9 million. This amount is broken down as follows:
- 3.52 million for the Up Global subsidiary
- 250,000 for Coinme
- 150 000 for Bergquist.
In addition Bergquist was sanctioned by being removed as an officer for three years and banned from participating in ICOs during that time. These disciplinary actions are a testament to the SEC’s strictness in dealing with unscrupulous practices in the crypto field.
The controversial token scandal of 2017
In 2017, Coinme and its subsidiary Up Global launched their first token UpToken On the Ethereum blockchain to expand the number of ATMs Coinme. The SEC accuses Coinme and Up Global for selling the token UpToken as an investment contract, making it a security under U.S. financial laws.
The two companies raised $3.65 million, far less than the $18.5 million announced. Some of this money was used to create 30 new ATMs Coinme.
It was also revealed that both companies had planned measures to acquire a substantial amount of of the asset prior to the commencement of the ICO. In other words, they artificially inflated the value of the ICO by purchasing their own tokens. Of course, the SEC was not fooled by these unscrupulous practices and decided to take tough action against the accused.
It seems that the SEC is deploying all its artillery to root out crypto-related businesses in the US. Meanwhile, rumors of a possible Gary Gensler’s impeachment, the chairman of the SEC, by Congress, is being widely reported. If this happens, would it mean the end of the SEC’s anti-crypto war?
Coming from a journalism university background, I came across Bitcoin and cryptocurrencies not long ago.
The potential of the Blockchain seduced me and I made it my research topic.