CoinAlpha fined $50,000 for Selling Unregistered Securities
The US Securities and Exchange Commission (SEC) has issued a cease and desist order against a cryptocurrency investment fund for selling and distributing unregistered securities. The securities regulator has also slapped a Delaware-based blockchain financial products company, CoinAlpha Advisors LLC with a $50,000 fine.
The SEC order proves that, CoinAlpha failed to register its business, which involved distribution and investing in crypto assets, as required by US federal law. The company, according to the SEC notice, had applied for a distribution license exemption, but it didn’t fit the criteria for approval. Despite that, CoinAlpha engaged itself in the activities that violated the specification of the US federal law.
The SEC order reads: “Respondent filed a Form D Notice of Exempt Offering of Securities with the Commission on November 3, 2017,”. It further stated that “CoinAlpha 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.”
CoinAlpha did not also take required measures to ensure that all its investors were fully accredited. The company solicited these investors through its official website, and also via blog postings, media interviews, and digital asset and blockchain conferences.
“[CoinAlpha] further voluntarily reimbursed all fees it had already collected, surrendered all rights to future management and incentive fees unwound the Fund, and made payments to ensure that no Fund investor suffered a loss,” SEC remarked. During the Commission staff’s investigation, Respondent retained a third party who determined that all 22 investors were accredited.”
But, for the fact that CoinAlpha complied with the SEC rules after it received the notice, the US securities regulator decided to impose a minimal punishment on the company, which included the aabove mentioned fine and return of funds to its rightful investors.