Cease and desist
According to the SEC’s statement, it was misleading for CAM to term itself as the ‘first regulated crypto asset fund in the U.S’, which allowed them to raise £3.6 million from its investors. The commission asserted that the fund has never at any point registered as an investment firm. By claiming to have the requisite credentials to hold and trade securities, the commission notes that the fund ‘willfully’ broke the law.
Large fines for CAM
The SEC have slapped both CAM and its founder Timothy Enneking with a $200,000 fine in its cease and desist order. The regulator was alarmed that despite being a notable founder and manager of other private funds related to crypto, Enneking did not see the need to register CAM considering his previous experience with regulatory compliance.
Respondents did not have pre-existing relationships with these investors and
engaged in a general solicitation of public interest in the offering through CAM’s website, social
media accounts, and traditional media outlet interviews. CAM did not file or cause to be filed a
registration statement with the Commission, and no exemption from registration was available
during the Relevant Period.
After the SEC reached out to the company, CAM have agreed to halt its public offerings and have instead started to offer a buyback scheme for its investors, as well as paid the fine.
The SEC also moved against another firm that dealt with digital assets, issuing an order against ‘ICO superstore’ TokenLot. The commission accused TokenLot of conducting business without registering either. This comes on the backdrop of a previous move by the Financial Industry Regulatory Authority (FINRA) filing charges against a man from Massachusetts for the fraudulent dealing of securities and unlawful distribution of a yet-to-be-registered cryptocurrency, Hempcoin.
Bitcoin, Ethereum, and ICOs
It would be noted that SEC has repeatedly reiterated that Bitcoin and Ethereum are not securities but initial coin offerings (ICOs) are, and thus ought to fall under the relevant securities laws. This has seen most of the U.S. regulators crack down on ICO fraud lately, as well as cautioning retails investors of potential risks in this trade.