US SEC Starts Administrative Proceedings against American CryptoFed

The United States Securities and Exchange Commission (SEC) on Friday kicked off administrative proceedings against American CryptoFed, a Wyoming-based decentralized autonomous organization (DAO). The regulator wants “to determine whether a stop order should be issued to suspend the registration of the offer and sale of two crypto assets, the Ducat token and the Locke token,” SEC announced in <a href=”https://www.sec.gov/news/press-release/2022-208″ target=”_blank” rel=”nofollow”>a statement</a> issued on Friday. Ducat token is an algorithmic stablecoin while Locke is a government token created by American CryptoFed.The US securities regulator’s action comes over one year after American CryptoFed filed a Form S-1 registration before the Commission. Form S-1 is an initial registration required of companies that want to offer new securities to the public. American CryptoFed also filed a Form 10 registration that sought to register the tokens as equity securities. However, SEC rejected the registrations.In November last year, the regulator halted the registration of the two tokens, alleging that the DAO failed to provide information on its “business, management and financial conditions.” This included audited financial statements.The firm’s filing also “contained materially misleading statements and omissions, including inconsistent statements about whether the tokens are securities,” the regulator said. In the same month, the regulator issued an order examination to determine whether a stop order should be issued against the DAO’s registration.However, in the Friday statement, SEC alleged that American CryptoFed failed to cooperate with its examination of its registration statement. Regardless, Marian Orr, the firm’s CEO, told CoinDesk last year that it refuted “point by point” the criticisms raised by the regulator.Recent DevelopmentsAccording to <a href=”https://www.sec.gov/rules/other/2022/33-11074.pdf”>a recent SEC filing</a>, American CryptoFed in May 2022 wrote to the Commission that it would proceed with issuing the tokens in July 2022. But in June, the firm instead filed an application to withdraw its registration from the Commission. SEC said it rejected the application on the ground that “granting of the withdrawal request is not consistent with the public interest and the protection of investors.”In the new SEC statement, David Hirsch, Chief of the Enforcement Division’s Crypto Assets and Cyber Unit, noted that an issuer that wants to offer crypto assets as securities transactions “must furnish the required disclosure information to the SEC.”“American CryptoFed not only failed to comply with the disclosure requirements of the federal securities laws, but it also claimed that the securities transactions they seek to register are not in fact securities transactions at all,” Hirsch said.

This article was written by Solomon Oladipupo at www.financemagnates.com.