The U.S. Securities and Exchange Commission (SEC) has announced it has settled charges against a company and its CEO for making misleading statements in connection with an unregistered ICO.
The firm, Loci Inc., and its chief executive, John Wise, have been charged for making “materially false” and misleading statements in connection with an unregistered sale of digital assets.
The financial regulator posted the notice on its official website, adding the firm misused investor funds and made false statements concerning the company’s revenues, number of employees, and platform user base.
$7.6 million penalty
The SEC order found that from August 2017 through January 2018, Loci and its CEO raised $7.6 million from investors in an ICO by offering and selling crypto tokens called “LOCIcoin.”
The firm promoted a software platform called InnVenn which was touted as the “ultimate asset management system.” The order also found that Wise misused $38,163 in investor proceeds to pay his personal expenses.
LOCIcoins were actually classified as securities, the SEC added, but the offering was not registered with the regulator and no exemption from registration applied. Kristina Littman, chief of the SEC Enforcement Division’s Cyber Unit, stated:
“Loci and its CEO misled investors regarding critical aspects of Loci’s business. Investors in digital asset securities are entitled to truthful information and fulsome disclosures, so they can make informed investment decisions.”
The firm has not admitted or denied the SEC’s findings, but agreed to a cease and desist order. It also agreed to destroying their remaining tokens and requesting the removal of them from trading platforms. It would also publish the SEC’s order on its social media channels, and refrain from participating in future digital asset securities offerings.
Crypto lawyer “_gabrielShapir0” [@lex_node] commented on the destruction of the tokens stating:
“Really disappointed with the direction the SEC has gone on tokens — it has nothing to do with investor protection anymore; in fact, the SEC is causing and exacerbating investor harm.”
The SEC’s order imposes a $7.6 million civil penalty against Loci and its CEO.
Crypto off the agenda?
On June 18, it was reported that the SEC had released its regulatory agenda for 2021 and cryptocurrency was not on it.
The move to leave bitcoin (BTC) and its brethren off the agenda is a little surprising since SEC Chairman, Gary Gensler, had often spoken about the need for more regulation regarding crypto assets.