US SEC Has Charged A Cryptocurrency Startup And Its CEO For Unregistered ICO

The SEC recently announced that charges have been settled against Loci Inc. and its CEO, John Wise, on the grounds of creating statements that were deemed to be misleading and ‘materially false’. These statements had been made in conjunction with allegedly unregistered sales pertaining to various digital assets.

The misleading statements had been revealed to have had a connection with an ICO that was found to be unregistered. The SEC thus had the notice be posted on its own official website before adding that Loci Inc. had, in fact, intentionally misused the funds provided by investors and had lied about the company’s platform user base, number of employees, and overall revenues.

A penalty of $7.6 million has been issued

Through the SEC’s investigation, it had been discovered that during the period between August of 2017 to January of 2018, Loci Inc., along with its CEO, had managed to generate $7.6 million via investors from an unregistered ICO. This had been done via offering and then selling cryptocurrency tokens known as ‘LOCIcoins’.

Furthermore, the company had also promoted InnVenn, a software platform that had been touted as being the ‘ultimate system for asset management. The SEC’s order additionally indicated that the CEO had misused the proceeds given by the investors, which amounted to just over $38,160, in an attempt to pay off his own personal expenses.

The SEC clarified that the LOCIcoins had been classified as securities. However, the offering was nevertheless unregistered. Moreover, any application for exemption from registration had not been filed either.

As of now, Loci Inc. has not offered any kind of official response to the accusations. However, it did agree to the SEC’s order to ‘cease and desist’. It had even agreed to burn all of the remaining tokens in its possession, as well as adhere to the request to remove itself from various trading platforms. Lastly, it will publish the order on its respective social media accounts and will also refrain from taking part in any offerings pertaining to digital asset securities in the future.

SEC’s plans for crypto remain ambiguous

Many have expressed frustration regarding the SEC’s decision and believe that this is nothing more than its latest attempt to damage the cryptocurrency industry’s reputation.

Whatever the case may be, the SEC’s future plans for crypto remain a bit unclear, as it had stated less than a week ago that crypto was not included in 2021’s regulatory agenda, in a move that was undoubtedly surprising, to say the least.

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