U.S. SEC clamps down on a crypto fund, slaps fine of $50,000
The U.S. Securities and Exchange Commission (SEC) has again come down heavily on a firm that seems to have erred and crossed the line. The SEC has ordered fund manager CoinAlpha Advisors LLC to pay a $50,000 fine following what it deemed to be an unregistered securities sale.
According to the SEC order which was published on Friday, CoinAlpha had raised approximately $600,000 from 22 investors during a period of 8 months from October 2017 to May 2018. Through this offering, the investors purchased limited partnership interests in the Fund in exchange for a pro rata share of any profits derived from the Fund’s investment in digital assets.
While the company did file a “Notice of Exempt Offering of Securities,” it did not file or cause to be filed a registration statement with the Commission, and no exemption from registration was available for the securities offering during the Relevant Period.
Further, the agency said that the company did not run adequate know-your-customer procedures to ensure that all of its investors were accredited, though it did hire a third-party to check accreditation status after the SEC first contacted it.
After SEC’s order, CoinAlpha has halted all its operations and has undertaken a review of its website, digital asset, and blockchain conference marketing materials, and offering procedures. The company then voluntarily reimbursed all the fees it had already collected and surrendered all rights to future management and made payments to ensure that no investor suffered a loss.
The sanctions imposed by the SEC include paying a fine of $50,000 to the SEC within 10 days of the entry of this order. This will be in addition to the reimbursements mentioned earlier. CoinAlpha has not accepted or denied the allegations put forward by the regulatory watchdog.
In another development on Friday, the SEC postponed its decision on the highly anticipated Bitcoin [BTC] Exchange-Traded Fund (ETF). The new deadline set for the SEC’s decision is February 27, 2019.
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