SEC Has Imposed a Fine of $4M on Crypto Exchange Coinme
- The United States SEC has fined crypto exchange Coinme for allegedly making “misleading” claims about its native coin, UpToken.
- The regulator settled charges against Coinme Inc., its subsidiary Up Global SEZC, and the CEO of both entities, Neil Bergquist.
- The SEC says that Bergquist and Up Global allegedly made “false and misleading statements” regarding the demand for UP.
- Up Global and Coinme are both liable for the $3.52 million fine.
- Separate fines of $250,000 and $150,000 each have been imposed against Coinme and Bergquist, respectively.
The United States Securities and Exchange Commission (SEC) continues its crackdown on crypto exchanges and has served $4 million in fines to Seattle-based cryptocurrency trading platform Coinme for allegedly making “misleading” claims on its native crypto token UpToken (UP) and offering unregistered securities.
In a press release, the SEC revealed that it has settled charges against Coinme Inc., its subsidiary Up Global SEZC, and the Chief Executive Officer (CEO) of both entities, Neil Bergquist.
The SEC alleges that between October and December 2017, the UP initial coin offering (ICO) by Coinme, Up Global, and Bergquist was an unregistered securities offering. It believes that the entities “marketed the financial benefit that UpToken investors would reap from Coinme purchasing UpToken in the secondary market after the ICO.” The announcement states:
“Tengaged in unregistered offers and sales of crypto asset securities during which, among other things, they marketed the financial benefit that UpToken investors would reap from Coinme purchasing UpToken in the secondary market after the ICO.”
Interestingly, the UP ICO secured around $3.6 million to increase the number of Bitcoin ATMs in the exchange’s array by adding 30 more ATMs. When using the ATMs, the native token holders received benefits like reduced fees and a 1% cashback paid in UP.
Coinme modified its offering in January 2019 by partnering with Coinstar to use the latter’s cash-counting kiosks instead of its own ATMs to enable cash-to-crypto transactions. Coinme closed all of its ATMs by July of the same year.
“There is currently no use for UpToken, and UpToken holders can no longer use UpToken to obtain the benefits that were described in the UpToken offering materials,” it stated at the time.
This resulted in a dramatic decrease in the value of UpToken. The regulator says that Bergquist and Up Global allegedly made “false and misleading statements” regarding the demand for UP and the sum raised through the offering.
Up Global and Coinme are both liable for the $3.52 million fine. Additionally, separate fines of $250,000 and $150,000 each have been imposed against Coinme and Bergquist, respectively, which both of them have chosen to pay. Bergquist has additionally been barred from serving as an officer or director of a public business for a term of three years.
It is important to mention here that the Chairman of the SEC, Gary Gensler, released a 4-minute video taking shots at the crypto industry, claiming them to be “investment contracts” and therefore, classified them as securities. “Crypto platforms are contending that their investment contracts are something else,” he said, asking crypto exchanges to register their offerings as securities or face the regulatory consequences.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
