The U.S. Securities and Exchange Commission (SEC) has recently issued a cease-and-desist order against a crypto company. The firm is an investment fund focusing on cryptocurrencies that distributed unregistered securities. Additionally, the firm CoinAlpha Advisors LLC., will have to pay a $50,000 fine. This information was released by the regulatory agency a few days ago.
The SEC Keeps Searching for Unregistered Securities
As reported by the SEC the company CoinAlpha did not accept to register its business with local authorities. However, the company was involved in investing and distributing virtual currencies. The company should have registered itself as it is required by federal law. Additionally, the company applied for a distribution license exemption but it did not receive an approval.
Furthermore, the SEC did not take the necessary measures to ensure that the investors were accredited. 22 different investors from the official website and other blog postings, invested $608,491 in the cryptocurrency fund created by CoinAlpha. As soon as the SEC reached the CoinAlpha office, the company liquidated its fund.
About it, the report shows:
“[CoinAlpha] further voluntarily reimbursed all fees it had already collected, surrendered all rights to future management and incentive fees unwound the Fund, and made payments to ensure that no Fund investor suffered a loss.”
After the SEC sent the notice to the company, CoinAlpha complied with all the necessary regulations. This is why the firm had to pay just a small sum of money as a penalty. In addition to it, CoinAlpha had to return the funds to the investors.
The decision took by the SEC shows that there is an intention to regulate the crypto and blockchain industries. A few weeks ago, the SEC announced two enforcement actions against two Initial Coin Offerings (ICOs) called AirFox and Paragon. Both ICOs distributed tokens without a license. Additionally, it has also charged EtherDelta developers for facilitating trading activities of unregistered securities on their platform.
The SEC informed that not only large companies are being investigated but also smaller firms with minimal activity.
However, the SEC is not the only regulatory agency around the world controlling and trying to regulate the crypto and blockchain markets. In Japan, the regulatory agency of the country is trying to impose clear rules for exchanges to operate. Crypto traders are also protected by local agencies and investors can operate in a more predictable environment.
