SEC looks down on UpToken, imposes crypto fines
Technology
It has been cracking down on cryptocurrency markets since Gary Gensler became its chair in 2021
(Reuters) - The U.S. Securities and Exchange Commission has fined Seattle-based Coinme and related defendants nearly $4 million for conducting an unregistered and misleading offering of a crypto asset called UpToken.
Friday's settlement resolves claims that Coinme's Up Global unit and Neil Bergquist, who led both entities, misled investors in a late 2017 initial coin offering for UpToken, which was issued on the Ethereum blockchain.
The SEC said investors were led to believe Up Global would limit the supply of UpToken, while Coinme would create constant demand for UpToken to fund a bitcoin automated teller machine rewards program, helping boost UpToken's price.
According to the regulator, the claims were misleading because Up Global had quietly conducted transactions that reduced Coinme's need for UpToken.
It also said Up Global and Bergquist falsely told investors that the offering raised $10 million to $18.9 million despite knowing that it actually raised much less, $3.65 million.
Without admitting or denying wrongdoing, Coinme and Up Global will pay a combined $3.77 million, while Bergquist will pay $150,000. Bergquist, 35, also received a three-year ban from being an officer or director of public companies.
Coinme did not immediately respond to requests for comment.
The SEC has been cracking down on cryptocurrency markets since Gary Gensler became its chair in 2021.
Gensler told the House Financial Services Committee on April 18 that crypto markets were "rife with noncompliance" that put investors at risk and undermined public trust in capital markets.
