USA: SEC Levels Charges Against Securities Dealer – The Federal Security Laws Enforcing Agency, SEC, made an announcement during a press release of levelling charges against a Marshall Islands-registered securities dealer 1pool Ltd (also known as 1Broker) and CEO Patrick Brunner for “allegedly violating the federal securities laws in connection with security-based swaps funded with bitcoins.”
EXCERPTS from SEC’s complaint
- Investors from the United States and elsewhere were solicited to trade security-based swaps (CFDs or forward contracts.
- It was only necessary to provide an email address. And a username to open an account (i.e. no proof of ID or address was required);
- The only way to withdraw or deposit funds was via Bitcoin;
- An undercover Special Agent with the Federal Bureau of (FBI) was able to buy several security-based swaps. From the U.S. despite not being an accredited investor;
- Broker and its CEO “failed to transact its security-based swaps on a registered national exchange. And failed to properly register as a security-based swaps dealer.”
USA: SEC Levels Charges Against Securities Dealer -The complaint was filed in the U.S. District Court for the District of Columbia and seeks permanent injunctions, disgorgement plus interest, and penalties. The SEC states that the Commodity Futures Trading Commission (CFTC) has filed its own charges. Similarly, which is against 1pool in a parallel action suit.
According to the complaint, a Special Agent with the Federal Bureau of Investigations (FBI), acting undercover, purchased security-based swaps on broker’s platform from the U.S., though he did not comply with the discretionary investment thresholds required by the federal securities laws. The SEC also adds that users could open accounts on the platform with their email address and a user name only, without providing additional information.
USA: SEC Levels Charges Against Securities Dealer -The SEC further alleges that Brunner and 1broker failed to transact its security-based swaps on a traditional exchange registered in the U.S., as well as properly registering as a security-based swaps dealer. Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office commented:
“International companies that transact with U.S. investors cannot circumvent compliance with the federal securities laws by using cryptocurrency.”
This week, the SEC notified it is seeking sanctions against the individuals behind the allegedly fraudulent ICO known as PlexCoin. The parties are accused of “misappropriating” investor funds that were “illegally” raised in a misleading, deceptive, and unregistered securities offering.
USA: SEC Levels Charges Against Securities Dealer -Earlier this month, the SEC issued a cease and desist order and a $200,000 fine to Crypto Asset Management (CAM) and its founder Timothy Enneking. The SEC order says that CAM misrepresented itself as the “first regulated crypto asset fund in the United States” and raised $3.6 million from 44 investors in late 2017, bringing its net asset value to $37 million.