The Securities and Exchange Commission (SEC) issued a cease-and-desist order against a crypto investment fund for distributing unregistered securities. The order also comes with a $50,000 fine.
The company that has to pay the fine is CoinAlpha Advisors LLC , a Delaware-based blockchain financial products company.
What’s going on?
According to the SEC order, CoinAlpha declined to register its business, which involved investing in and distribution of crypto assets, as required by federal law.
The company, according to the SEC notice, had applied for a distribution license exemption, but it didn’t fit the criteria for approval. Despite that, CoinAlpha engaged itself in the activities that violated the specification of the US federal law.
More than that..
The SEC also found that CoinAlpha did not take sufficient measures to ensure that all its investors were accredited. The company solicited these investors through its official website, and also via blog postings, media interviews, and digital asset and blockchain conferences.
As the negligence took place, a total of 22 investors had already invested $608,491 in the CoinAlpha’s crypto fund. However, when SEC staff reached the CoinAlpha office, the company obliged and liquidated its fund.
Since CoinAlpha complied with the SEC regulations after it received the notice, the US securities regulator imposed a minimal punishment on the company, which included a fine — as mentioned above — and return of funds to its rightful investors.
Many blockchain related companies have been running into regulation problems. USA is a highly regulated country especially in the fintech space. This doesn’t mean it’s a bad thing though. It means that the government is taking things more seriously in this industry.