US SEC starts proceedings against American CryptoFed
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
The US Securities and Exchange Commission (SEC) has launched administrative proceedings against American CryptoFed. The latter is a decentralized autonomous organization (DAO) based in Wyoming.
SEC starts proceedings against CryptoFed
The SEC has started these proceedings to determine whether there should be a stop order to halt the registration of offering and selling two cryptocurrencies known as Ducat and Locke. Ducat is an algorithmic stablecoin, while Locke is a token created by American CryptoFed.
The actions taken by the SEC come one year after American CryptoFed filed a Form S-1 registration with the commission. This is a form needed to be filled out by companies planning to provide new securities to US residents. American CryptoFed also filed Form 10 registration to register these tokens as equity securities, but SEC failed to approve the filings.
The regulator has also added that the filing made by the company “contained materially misleading statements and omissions, including inconsistent statements about whether the tokens are securities.”
During the same month, the SEC required an order examination to determine whether a stop order needed to be imposed against the registration of this DAO. However, in a recent statement, the SEC said that American CryptoFed failed to cooperate with the regulator during the assessment of its registration statement.
The company’s CEO, Marian Orr, has previously refuted the claims made by the SEC. In a statement issued last year, Orr said that he had denied the SEC’s criticism “point by point.”
A recent SEC filing with the SEC says that in May 2022, American CryptoFed told the commission that it would issue the two tokens in July 2022. However, in June 2022, the company filed to withdraw its application with the SEC. The SEC says it rejected this application because the withdrawal request was not in the public’s interest.
The Chief of the Enforcement Division’s Crypto Assets and Cyber Unit, David Hirsch, said that an individual that wanted to provide crypto assets as securities transactions needed to provide the needed disclosure information with the SEC.
SEC’s regulations over crypto assets
The SEC has been criticized for its lack of providing a clear regulatory framework for crypto assets. In 2018, the former SEC Chair, Jay Clayton, said that most cryptocurrencies were securities that needed to be registered with the commission. The same thoughts have been shared by the current chair of the SEC, Gary Gensler.
The SEC has since launched a battle against firms that raise funding using crypto assets. One of the most high-profile cases is currently involving the SEC and Ripple. According to the SEC, Ripple’s XRP token is a security that needs to be registered with the commission. The SEC is charging Ripple and its executives with an unregistered securities offering.