Last Updated on May 1, 2023 by Bitfinsider
The United States Securities and Exchange Commission (SEC) has issued a cease-and-desist order to Bitcoin ATM operator Coinme and its business subsidiary Up Global Inc. for conducting an illegal ICO (initial coin offering) of the crypto asset UpToken. Coinme, Up Global, and their founder and CEO, Neil Bergquist, have been ordered to pay a total of $3.9 million in sanctions.
Coinme and Up Global conducted an ICO for the Ethereum-based asset UpToken in 2017 to raise funds for the expansion of Coinme ATM operations across the United States.
According to the SEC’s settlement report, the ICO generated more than $3.65 million. A portion of the funds were intended to finance the installation of 30 new Coinme ATMs, while the remainder would be used for other corporate purposes. However, according to the SEC, investors were misled into believing that Up Global would limit UpToken’s supply while Coinme would generate constant demand for the token in order to fund a bitcoin ATM rewards program, thereby increasing UpToken’s price.
According to the regulator, however, UpToken was promoted and sold to investors as an investment contract and is therefore a security under US financial law. Consequently, all parties involved in the offering have been accused of selling unregistered securities.
The SEC has eventually disclosed that Coinme and its affiliates misled the public by claiming the ICO raised $18.5 million when in reality only $3.65 million was collected.
The SEC brought charges against all three parties involved in the UpToken ICO, and all parties reached settlements.
Following the settlement, the SEC issued a cease-and-desist order against Coinme and Up Global, prohibiting their participation in any coin offering for an indefinite period of time. Bergquist has been prohibited from participating in ICOs in his personal capacity for three years.
Bergquist will pay a sanction of $150,000, while Coinme and Up Global will pay fines totaling $250,000 and $3,520,000, respectively.
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