- SEC penalizes two crypto related companies for false marketing and failure to comply with the regulation.
- US Judge in Brooklyn says that ICOs can be governed by Security laws.
The US regulators stepped up their efforts to fight fraud and illegal activities and law breaches in the nascent cryptocurrency and ICO industry. The U.S. Securities and Exchange Commission penalized two crypto companies for misleading declarations and failure to comply with the regulatory requirements.
Thus, Crypto Asset Management LP (CAM) allegedly raised over $3 million last year by claiming itself to be “the first regulated crypto asset fund in the United States,” which was not true. The company will have to pay the penalty of $200,000. The CEO Timothy Enneking agreed to the cease-and-desist letter, though he neither admitted nor denied the accusations.
Meanwhile, TokenLot LLC and its owners Lenny Kugel and Eli L. Lewitt were charged for providing broker-dealers services without proper registration and licensing. The company offered to buy tokens during ICO and at the secondary market.
Meanwhile, U.S. District Judge Raymond Dearie in Brooklyn ruled that U.S. securities law can be used to prosecute fraud cases related to cryptocurrency offerings.
This case may become a precedent as the first court decision to address the issue and a legal victory of the authorities in their effort to regulate multi-billion dollar industry of initial coin offerings.
These decisions may put the stressed crypto market under additional pressure, intensifying the decline. Bitcoin, the largest digital asset, is now trading at $6,269, down 1% on a daily basis. Ethereum is changing hands at $175, off the intraday low at $174.04. The coin is the most vulnerable, as its platform is widely used for creating new tokens during ICOs.
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