Collected 4.68 billion U.S. dollars in illegal income and fines! SEC releases “Enforcement Report Card” for fiscal year 2020 (www.blockcast.cc)

On November 2, the Enforcement Division of the US Securities and Exchange Commission (SEC) released its annual report for fiscal year 2020. The report provides a comprehensive overview of the achievements of the department in the past year and discusses key areas of major actions and strategic changes.

SEC Chairman Jay Clayton said: “This year’s report highlights the tremendous efforts made by law enforcement agencies across the country to identify misconduct and take meaningful action to protect American investors from improper behavior.”

The report shows that in fiscal year 2020, the SEC took 715 enforcement actions, including 405 independent actions. These actions resolved a series of major issues, including issuer disclosures and violations of accounting regulations, foreign bribery, investment advisory issues, securities issuance, market manipulation, insider trading, and misconduct by broker-dealers. Through these actions, the SEC received a total of approximately US$4.68 billion in illegal gains and fines, breaking records, and returned more than US$600 million to victims of investors.

In this 56-page report, the SEC also mentioned enforcement actions against ICOs. The author briefly sorted out the contents and formed the following ICO enforcement list. A total of 8 projects were mentioned in the document, including an enforcement action against celebrity endorsement platforms.

Telegram

According to the SEC’s complaint, Telegram Group Inc. and its wholly-owned subsidiaries began to raise funds in January 2018 to support the company’s business development, including the development of its own blockchain, “Telegram Open Network” or “TON Blockchain” “And mobile messaging apps. It sold about 2.9 billion digital tokens called “Grams” to 171 buyers around the world and raised more than $1.7 billion in funds, of which more than 1 billion Grams were sold to 39 American investors.

On October 11, 2019, the SEC filed an emergency lawsuit against Telegram and its wholly-owned subsidiaries and obtained a temporary restraining order because the company was suspected of violating the federal securities laws by operating under the name “Grams” without registration. ”Digital tokens. Following the SEC’s motion, the court issued a preliminary injunction prohibiting the delivery of Grams.

After this decision, Telegram agreed to a settlement and was ordered to return more than $1.2 billion to investors and pay a civil fine of $18.5 million.

Kik

On June 4, 2019, the SEC filed a complaint with the U.S. District Court for the Southern District of New York, accusing Kik of selling digital asset securities to U.S. investors in 2017 without registering in accordance with the requirements of U.S. securities laws.

The court approved the SEC’s motion for summary judgment on September 30, 2020. The undisputed facts proved that Kik’s sale of “Kin” tokens is a sales investment contract and therefore also a securities sale. Kik is conducting unregistered securities. The issuance violated the federal securities laws, and the securities company is not eligible for any exemption from registration.

In the final judgment, KIK will need to pay a fine of 5 million U.S. dollars to the SEC. In the next three years, Kik will also issue a notice to the SEC before issuing, selling and transferring digital assets.

BitClave

On May 28, 2020, the SEC announced allegations of unregistered digital asset securities initial offering (ICO) against California-based blockchain services company BitClave PTE Ltd. According to the SEC, BitClave raised more than $25 million in funds by selling its token CAT to approximately 9,500 investors (including US investors) between June and November 2017. BitClave said it will use the proceeds of ICO to develop, manage and sell a blockchain-based search platform for targeted consumer advertising. BitClave also emphasized that its expected token value will increase and can be used for third-party digital asset trading platform transactions.

The SEC determined that BitClave violated the registration requirements of the Federal Securities Act. BitClave agreed to return US$25 million in ICO proceeds, in addition to paying US$3 million in pre-judgment interest and a US$400,000 fine. The SEC also requires the establishment of a fund to return the funds paid by BitClave to investors. BitClave agreed to transfer all remaining CATs under its control to the fund manager in order to permanently disable and request the removal of CATs from all digital asset trading platforms.

Shopin

On December 11, 2019, the SEC accused Eran Eyal, CEO of blockchain company Shopin, of defrauding investors in an initial public offering (ICO), raising more than $42 million from hundreds of investors.

The SEC’s complaint alleges that from August 2017 to April 2018, Eran Eyal sold tokens through ICO and conducted fraudulent unregistered securities issuance. Shopin claims to use the funds from the token sale to create universal shopper profiles maintained on the blockchain. These profiles will track the purchase history of online retailers and recommend products based on this information. The SEC investigation found that Shopin had never created its so-called blockchain platform. Eyal lied repeatedly to Shopin investors, including falsely claiming to have established partnerships with certain well-known retailers, and embezzled at least $500,000 in investor funds for personal use.

The SEC filed a complaint with the Federal District Court of Manhattan alleging that Eyal and Singin violated the anti-fraud and registration provisions of the federal securities laws and sought permanent injunctions and civil penalties.

NAC Foundation

On June 25, 2020, the SEC accused NAC Foundation CEO Marcus Andrade and his assistant Jack Abramoff of using AML BitCoin for a $5.6 million token issuance to defraud investors. The defendant described AML BitCoin as a token superior to the original Bitcoin and built anti-money laundering, anti-terrorism and anti-theft technologies on NAC’s own “privately regulated public blockchain.” The SEC stated that AML BitCoin does not actually have any touted features, and its blockchain development is still in its early stages. In addition, Marcus Andrade was also accused of manipulating the market to increase the trading volume and price of tokens, and embezzled approximately $1.1 million for personal use.

The SEC filed a complaint in the Northern District of California, accusing NAC, Andrade and Abramoff of violating the anti-fraud and securities registration requirements of the Federal Securities Act, and accusing Abramoff of violating the broker-dealer registration requirements. The SEC is seeking permanent injunctions and civil penalties to prohibit NAC and Andrade from participating in future securities offerings.

Unikrn

On September 15, 2020, the SEC announced charges against Unikrn Inc., an online e-sports gaming and gambling platform operator based in Seattle, claiming that the company issued unregistered digital asset securities.

According to the SEC, between June and October 2017, Unikrn raised approximately $31 million by issuing UnikoinGold (UKG) tokens. Unikrn plans to use the distribution proceeds to provide more functions on the gaming platform and develop other applications based on UKG tokens. Unikrn promises to investors that it will promote the secondary trading market of tokens, increase the demand for tokens, and increase the value of tokens.

The SEC determined that Unikrn provided and sold UKG under an investment contract as securities, but failed to register for issuance or obtain an exemption, thus violating the registration requirements of the Federal Securities Law. Unikrn finally agreed to pay a fine of 6.1 million US dollars, agreed to ban UKG, and remove UKG from all digital asset trading platforms.

Boon.Tech

On August 13, 2020, the SEC stated that Virginia-based Boon.Tech and its chief executive officer Rajesh Pavithran were suspected of fraud and violation of registration regulations. Between November 2017 and January 2018, the SEC issued more than 1,500 reports to the United States and the world. An investor sold Boon Coins and raised about $5 million in funds to develop a platform to connect the two parties in the recruitment process.

The SEC believes that Boon Coins coins are provided and sold as investment contracts and are therefore securities, while Boon.Tech and Pavithran are not registered for issuance. In addition, Pavithran and Boon.Tech made false and misleading statements to investors.

The SEC determined that Boon.Tech and Pavithran violated the anti-fraud and registration requirements of the Federal Securities Act. Boon.Tech promised to pay $600,334 in pre-judgment interest and also gave up $5 million in profits. The SEC also requires Pavithran and Boon.Tech to “destroy all Boon tokens they own, issue a request to remove Boon tokens from any further transactions on all third-party digital asset trading platforms, and prohibit participation in any future digital assets. Issuance of securities”. In addition, Pavithran was required to pay a fine of $150,000 and he was prohibited from serving as a senior manager or director of a listed company.

Bitcoiin2Gen

On February 27, 2020, the SEC announced a settlement with actor Steven Seagal, who was accused of failing to disclose the payment he received to promote Bitcoiin2Gen’s (B2G) ICO.

The SEC stated that Seagal did not disclose the $250,000 in cash and $750,000 worth of B2G tokens he received to promote Bitcoiin2Gen. These promotions include posting on its public social media accounts, encouraging the public not to “miss” Bitcoin2Gen’s ICO, and a press release to become a Bicoin 2Gen brand ambassador. Bitcoiin2Gen’s press release quoted Seagal’s post, saying it was “wholeheartedly” Land” supports ICO.

The SEC believes that according to the antitrust provisions of the Federal Securities Act, any celebrity or other individual who promotes virtual tokens or coins as securities must disclose the nature, scope and amount of compensation received from the promotion.

The SEC ruled that Seagal violated the anti-peddling provisions of the Federal Securities Act. In the end, Seagal agreed to pay 157,000 US dollars, which was the sales amount he actually received, plus interest and fines before the judgment. In addition, Seagal agreed not to promote any digital or other securities for three years.

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