The US Securities and Exchange Commission imposes $4 Million Fine on Coinme for Misleading Investors in Initial Token Issuance

According to reports, the US Securities and Exchange Commission has imposed a fine of nearly $4 million on Coinme and related defendants based in Seattle. The SEC stated that Coinme’s Up Global department and Neil Bergquist, who led these two entities, misled investors in the initial token issuance of UpToken on the Ethereum blockchain at the end of 2017.

The US SEC has imposed a fine of nearly $4 million on Coinme and related defendants

The US Securities and Exchange Commission (SEC) has imposed a fine of nearly $4 million on Coinme and related defendants based in Seattle. The SEC stated that Coinme’s Up Global department and Neil Bergquist, who led these two entities, misled investors in the initial token issuance of UpToken on the Ethereum blockchain at the end of 2017.

1. What is Coinme?

Coinme is a Seattle-based company that provides digital currency services, including bitcoin ATMs, digital wallets, and crypto trading. The company was founded in 2014 and has since become one of the leading cryptocurrency service providers in the United States. Coinme’s Up Global department is responsible for the company’s initial token offering.

2. What is UpToken?

UpToken is a cryptocurrency token issued by Coinme on the Ethereum blockchain. The token was launched in November 2017 and was used as a reward for using Coinme’s bitcoin ATMs. Coinme initially issued 100 million UpTokens and later increased the total supply to 135 million.

3. What was the SEC’s investigation about?

The SEC’s investigation was focused on Coinme’s initial token offering of UpToken on the Ethereum blockchain. According to the SEC, Coinme’s Up Global department and Neil Bergquist, who led these two entities, misled investors by making false and misleading statements about the value and potential of UpToken. The SEC stated that Coinme and Bergquist claimed that UpToken was a “utility” token that would appreciate in value and used the funds raised from the initial offering to build a “crypto ATM network” and for “general corporate purposes.” However, neither of these claims turned out to be true, and investors lost money.

4. How did Coinme and Bergquist Mislead investors?

Coinme and Bergquist misled investors by making false and misleading statements about the value and potential of UpToken. Specifically, they claimed that UpToken was a utility token that would appreciate in value and could be used to access discounted fees on Coinme’s bitcoin ATMs. The SEC found that neither of these claims turned out to be true, as UpToken’s value decreased significantly, and Coinme did not use the funds raised from the initial offering to build a “crypto ATM network.” Additionally, Coinme and Bergquist did not disclose to investors that they had sold millions of UpTokens to themselves and their associates before the initial offering, which is a violation of securities laws.

5. What is the SEC’s penalty for Coinme and Bergquist?

The SEC has imposed a penalty of nearly $4 million on Coinme and related defendants for the misleading statements made in the initial token offering of UpToken. The defendants have also consented to a cease-and-desist order, which requires them to refrain from violating securities laws in the future. Additionally, Bergquist has agreed to pay $150,000 in penalties personally.
In conclusion, the SEC’s investigation into Coinme’s initial token offering of UpToken on the Ethereum blockchain has resulted in a nearly $4 million penalty for the company and related defendants. The SEC found that Coinme and Bergquist misled investors by making false and misleading statements about the value and potential of UpToken, which resulted in investors losing money. This case highlights the importance of transparency and honesty in initial coin offerings and the need for investors to conduct proper due diligence before investing in any cryptocurrency.
**FAQ**
Q: What is the SEC, and why is it relevant to cryptocurrency investors?
A: The SEC is the United States’ securities regulator and is responsible for ensuring that companies comply with securities laws. The SEC’s involvement in cryptocurrency is relevant because many initial coin offerings are considered securities offerings, and the SEC has the authority to regulate these types of offerings.
Q: What is an initial coin offering, and why is it important to investors?
A: An initial coin offering is a way for companies to raise money by issuing digital currency tokens. Investors can purchase these tokens with the hope that their value will increase in the future. It is important for investors to conduct proper due diligence before investing in any initial coin offering to avoid the risk of losing money.
Q: How can investors protect themselves from misleading statements in initial coin offerings?
A: Investors can protect themselves from misleading statements in initial coin offerings by conducting proper due diligence, including researching the company and its management team, reviewing the white paper and other offering documents, and seeking advice from a trusted financial advisor. Additionally, investors should be wary of promises of guaranteed returns and should always scrutinize the claims made by the company and its management team.