SEC Orders CoinAlpha Crypto Fund to Shut Down
In an extension of their crackdown against unregistered securities, the SEC has officially issued a cease-and-desist order for CoinAlpha to close down their cryptocurrency investment fund.
The SEC has instructed the Delaware-registered CoinAlpha Advisors LLC to close their cryptocurrency investment fund over failing to register, the government body reported this weekend. All exchange funds must be registered with the SEC or qualify for a securities exemption and CoinAlpha had neither, the SEC concluded.
CoinAlpha formed in October of 2017 specializing in digital asset investment. Through their short history, they “raised approximately $600,000 from 22 investors, residing in at least five U.S. states.” Although the company raised the funds from investors, they did so without any “pre-existing substantive relationships” for most of them and also “failed to take reasonable steps to verify that investors in the Fund were accredited.”
CoinAlpha also solicited their fund through general public interest campaigns that were said to be misleading including blog posting, media interviews, and conferences.
The SEC has said that CoinAlpha was completely cooperative and “immediately halted the offering when contacted.” All fees were reimbursed and the company made sure no Fund investor suffered a loss. The company also agreed to pay a $50,000 civil fine to the SEC.
The SEC’s crackdown of CoinAlpha is yet another example of the government agency taking a hardline stance on most cryptocurrencies and their funds as being securities. Specifically, the SEC found that CoinAlpha violated Section 5(a) of the Securities Act, which prevents the sale of securities without registration.
The story follows a list of SEC enforcements this year against ICOs and advisors. In September, for example, the SEC even extended its jurisdiction beyond the United States to file charges against 1Broker in an unprecedented move. TokenLot and Crypto Asset Management were also hit with enforcement actions and forced to close their doors in October over trading and selling unregistered securities.
Do you have any thoughts on this breaking story? Has the SEC gone too far in its jurisdiction? Let us know in the comments below.
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