Many crypto companies face million-dollar fines over an alleged illegal securities offering
The Securities and Exchange Commission (SEC) has charged three different media firms, such as GTV Media Group Inc. and Saraca Media Group Inc. The media companies are accused of illegally providing unregistered securities and digital assets. Also, the attorney general of New York scored a victory in its case against crypto investment app Coinseed.
Crypto companies are facing repressive regulation
According to the SEC’s report, respondents encouraged many individuals to invest in GTV stock offerings. In addition to security services, GTV and Saraca also sell so-called “G-Coins” or “G-Dollars.” The agency alleges the three solicited thousands to invest in the token, as well as an unregistered offering of common stock. The websites have raised about $500 million from more than 5,000 individuals, including U.S. investors. Neither offering has required registration or user verification.
Companies have neither admitted nor denied the SEC’s findings but, at the same time, have agreed to pay disgorgement of $434 million, plus $16 million in prejudgment interest. After the refund, companies will have to pay a civil penalty of $15 million.
“Thousands of investors purchased GTV stock, G-Coins, and G-Dollars based on the respondents’ solicitation of the general public with limited disclosures,” Richard R. Best, Director of the SEC’s New York Regional Office, said in a statement. “The remedies ordered by the Commission today, which include a fair fund distribution, will provide meaningful relief to investors in these illegal offerings.”
In another development, according to September 13 default judgment, Coinseed and founder Delgerdalai Davaasambuu never even formally responded to the NYAG’s initial complaint, filed in February, which accused Coinseed of trading cryptocurrencies in the state without registering as a broker-dealer as required by Martin Act.
An announcement from attorney general Letitia James said that Coinseed violated a court order in the case from June that was supposed to stop the firm’s activities.
“Coinseed and its CEO defied that preliminary injunction by creating, offering, and selling a new virtual currency — including to New York investors — and failed to respond to Attorney General James’ complaint,” James’ office stated.
Coinseed and Davaasambuu are now required to pay investors $3,061,511, as well as court fines. They are also permanently prohibited from acting as a broker, agent, advisor, or issuer for any trading of commodities or securities in the state of New York.
These news comes out of context; as AZCoin News reported, Coinbase has received notice of possible enforcement action from the SEC related to its interest-earning product, which the company had planned to launch in the coming weeks.
Gary Gensler, chair of the United States SEC
Meanwhile, Gary Gensler, chair of the SEC, again urges crypto projects with securities to register with the regulatory body to ensure that investors are protected.
“I’ve suggested that crypto platforms and projects come in and talk to us,” said the SEC chair. “Many platforms have dozens or hundreds of tokens on them. While each token’s legal status depends on its facts and circumstances, the probability is quite remote that, with 50, 100, or 1,000 tokens, any given platform has zero securities.”
Gensler added that innovative technology such as crypto could be a catalyst for change in the financial sector, but not if it continued to stay outside the framework set up by lawmakers — something many crypto firms in the U.S. have argued is due to a lack of regulatory clarity.
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