SEC Penalizes Two Cryptocurrency Firms Violating Registration Requirements

The U.S SEC has penalized a crypto asset hedge fund and an ‘ICO Superstore’, according to reports published on Tuesday, September 11, 2018.


The U.S SEC has penalized a crypto asset hedge fund and an ‘ICO Superstore’, according to reports published on Tuesday, September 11, 2018.

Crypto Asset Management LP (CAM)

The commission has been sanctioning cryptocurrency companies that promote falsified hope or operate without relevant licenses.

Crypto Asset Management LP (CAM) and its Managing Director, Timothy Enneking were the first to be penalized by the SEC.

Enneking was accused of conducting an unregulated ICO and calling the firm, “the first regulated crypto asset fund in the United States.”

He was able to raise $3 million during the ICO that lasted four months and was penalized with a $200,000 fine. Enneking was also accused of more than 40% of the fund’s assets in cryptocurrencies, thus breaking multiple SEC regulations in the process.

The company and its head didn’t confirm nor deny the accusations but accepted to pay the fine.

TokenLot LLC

TokenLot LLC was another company that the commission penalized. The company and its founders were also charged with a penalty which is higher than that paid by CAM.

The company was asked to pay $471,000, $7,929 in interest and $45,000 for each proclaimed broker.

This is the first time that the commission is charging unregistered broker-dealers after the DAO Report was published last year which advised dealers and investors that digital securities have to be compliant to federal regulations.

The company, which was operated by Lenny Kugel and Eli L. Lewitt, asked investors to purchase CO tokens and partake in trading afterward. During the process, Token Lot handled orders from over 6,000 investors and invested in more than 200 cryptocurrencies.

Lewitt and Kugel weren’t registered brokers, even though they dealt with security tokens and traded some of the company profits.

The company operated for roughly four months last year, with an investigation into their activities by SEC led them to halt their operations.

The company also offered refunds to its investors, with SEC stating that this decision by the firm lightened their penalty.

Just like CAM founder, Kugel and Lewitt neither accepted nor denied the charges leveled against them but accepted to pay the fines. They will also agree to pay for a third-party company to destroy the remaining Token Lot inventory.

Co-Director of SEC’s Enforcement Department, Steven Peikin while commenting on this latest development stated that the penalties are an indication of the prompt cooperation and remedial actions taken by Token Lot, Kugel, and Lewitt.

SEC paying more attention to ICOs and crypto

The lack of proper regulations of the ICO and crypto markets is something SEC is worried about. The SEC chairman Jay Clayton has stated that ICOs have become a very important priority for the commission.

These latest penalties look like a start as there some unregistered or noncompliant companies and individuals in the country who have been dealing with what the SEC now classifies as securities tokens.

Leave A Reply

Your email address will not be published.