On Wednesday, November 10, the US Securities and Exchange Commission (SEC) blocked the registration of two digital tokens offered by the US-based Cryptofed, based in Wyoming. The securities regulator accused the company of providing misleading information to investors in its documents.
What happened?
In the filing, Wyoming-based American Cryptofed said its mission is "to create and maintain a monetary system with zero inflation, zero deflation, and zero transaction costs." The organization further added that its Ducat tokens offer inflation protection through an algorithm that creates and destroys Ducat.
In the filing, American Cryptofed proposed to register Ducat along with an accompanying Locke token, as securities. However, Cryptofed said it wants to register them as "utility tokens" rather than securities.
In its latest denial, the US SEC noted that the American Cryptofed failed to report the required information on the two tokens. Additionally, the Wyoming-based organization did not submit its "business, management and financial terms, including audited financial statements."
In her recent statement, Kristina Littman, head of the SEC Enforcement Division's Cyber Unit, said:
“Issuers attempting to raise funds from the public must provide the information investors need to make informed decisions. We believe that the American CryptoFed has made materially misleading statements and has not provided the information required by law in its registration form ".
SEC Ordinances for Administrative Proceedings
The SEC said it will order administrative proceedings to determine any appropriate action required for investor protection. The regulator said it will further decide to deny or suspend the registration date of the Ducat and Locke tokens.
American Cryptofed chief executive Marian Orr, however, declined to settle with the SEC. He noted that the company tried to discuss the matter with the SEC, but the regulator declined to answer the October rebuttal. In a statement, the US CEO of Cryptofed said:
“The alleged 'shortcomings' the SEC referred to were the lack of attributes inherent in the securities. These are attributes that the two tokens (Locke and Ducat) of a decentralized blockchain-based CryptoFed DAO monetary system will never have ”.
Recent development shows that the US SEC continues to take a tough stance on cryptocurrency deals taking place in the country. SEC President Gary Gensler said they will take a closer look at developments in the rapidly expanding cryptocurrency market. Previously, the SEC chairman had also referred to the cryptocurrency world as the "Wild West" filled with fraud and risk for investors.
Well, it will not be possible to invest in these new tokens soon, but those who want to do so these days can use Bitcoin system. It is a safe and reliable platform, which allows traders to do both manual and automatic trading. In this way, novice users are helped to enter the world of cryptocurrencies, without risking a large investment capital.
