The US Securities and Exchange Commission (SEC) has carried out another ICO related sanction, this time against CoinAlpha Advisors LLC, issuing a cease and desist order with an additional fine of USD 50,000 according to a filing published yesterday.
Established in July 2017, CoinAlpha Advisors LLC is a Fund manager registered with the Delaware authorities operating from California. The operators of the business were tasked with the management of the funds of CoinAlpha Falcon LP, a subsidiary of the former which was established later that year.
CoinAlpha’s intention was to raise funds and invest in digital assets on behalf of its investors and share the dividends among shareholders.
The commission’s concern was that unregistered securities were sold in exchange for partnership interests in the activities of the Fund. Apparently, CoinAlpha had never been registered with the Commission in any capacity. The filing reads that “approximately USD 600,000 from 22 investors, residing in at least five U.S. states had been raised within the period of October 2017 and May 2018.
The filing further reveals that the Fund had filed a “Form D Notice of Exempt Offering of Securities with the Commission on November 3, 2017”. However, this was done without “a registration statement with the Commission, and no exemption from registration was available for the securities offering during the Relevant Period,” thereby violating the securities law act preventing unregistered securities to be sold to US citizens.
Although, upon contact by the staff of the SEC, CoinAlpha stopped the offering and refunded investors of the funds including fees it had already collected.
CoinAlpha Advisors filed a Notice of Exempt Offering of Securities with the SEC on Nov. 3, 2017. However, the company was not registered with the SEC; therefore, CoinAlpha Advisors violated the securities law that “prohibits the sale of securities through interstate commerce or the mails unless a registration statement is in effect.”
CoinAlpha has been ordered to pay a “civil money penalty of USD 50,000” to the commission within 10 days.
The SEC continues to hold a tight grip on offenders of the securities act with regards to unregistered crypto-related securities offering, despite working to provide simplified crypto guidelines. This past fiscal year alone, reports reveal that more than 12 ICOs were shut down as a result of the crackdown activities of the commission, with more than USD 3.945 billion have be collected in fines and penalties.
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