A new rule has been announced by a federal judge in New York described starting Coin attractions under the roof of securities rules, the initial step of its kind legal case against a man who must have been charged due to improving digital currencies those were imagined returned by non-existent real estate and diamonds.
The case which was being held in a Brooklyn, New York, court; resulted in a win for federal prosecutors, who got Judge Raymond Dearie’s favor in both the prosecution of the defendant, Maksim Zaslavskiy and as the classification of starting Coin Offerings as reserves.
Rules regarding the classification of ICOs were key parts for the case because Zaslavskiy’s lawyers developed their case on the base that “security laws are unconstitutionally vague as applied.”
Judge Dearie answered to the defendant’s accusation, enunciating that:
“Congress’ purpose in enacting the securities laws was to regulate investments, in whatever form they are made and by whatever name they are called… Stripped of the 21st-century jargon, including the defendant’s own characterization of the offered investment opportunities, the challenged indictment charges a straightforward scam, replete with the common characteristics of many financial frauds”.
SEC Claims ICO Superstore with Operations Of Non-registered Brokers:
By following the rules of Judge Dearie regarding the classification of ICOs as securities, the SEC declared that they had claimed and got agreements with two orgs and their investors that were operating illegally in the US.
He initially is charged by the SEC TokenLot, a self-described ICO Superstore, that settled accusations with the SEC as operating as an unregistered broker-dealer. The SEC also claimed the investor of the site, noticing that Lenny Kugel and Eli L. Lewitt had “promoted TokenLot’s website as a way to purchase digital tokens during initial coin offerings (ICOs) and also to engage in secondary trading.”
The Michigan-based company has got over 6,100 orders from investors for more than 200 digital assets offerings, many of which the SEC deemed as securities. To offer securities to US-based investors, companies must register as a broker-dealer, and if they don’t they will be dominated to multiple charges.
The Co-Director of the SEC’s Enforcement Division, spoke about the importance of broker-dealer registration, Stephanie Avakian described:
“U.S. securities laws protect investors by subjecting broker-dealers and other gatekeepers to SEC oversight, including those offering ICOs and secondary trading in digital tokens. We continue to encourage those developing digital asset trading businesses to contact the SEC staff at [email protected] for assistance in analyzing registration and other securities law requirements”.
It is essential to notice that though TokenLot was being run illegally, they organized fully with the SEC, which led to much lighter accusations rather than their actions would have resulted.
Steven Peikin narrated; Who is the Co-Director of the SEC’s Enforcement Division, told TokenLot’s cooperation:
“The penalties in this case reflect the prompt cooperation and remedial actions by TokenLot, Kugel, and Lewitt. TokenLot, Kugel, and Lewitt provided valuable information to Commission staff, stopped the conduct, and refunded money to investors”.
In addition, to settle the accusations with TokenLot, the SEC also took step against Crypto Token Management LP (CAM), a cryptocurrency hedge fund that had been operating illegally in the US, while wrongly blaming to be the 1st regulated crypto asset fund in the U.S.
The hedge manager, Timothy Enneking, had grown more than $3.6 million over a four-months while claiming wrongly that his process was wholly legitimated with the SEC. Also, the SEC accuses to more than 40% of the assets in his fund which are digital securities, making his fund an illegitimate hedge company.
Dabney O’Riordan, the SEC’s Co-Chief of the Asset Management Unit, told about the rise of no-registered crypto hedge funds, described:
“Hedge funds seeking to ride the digital asset wave continue to proliferate. Investment advisers must be sure that the funds they offer adhere to the applicable registration obligations and must accurately represent their funds’ regulatory status to investors”.
It is likely that the SEC will start charging more unlawful operational funds and companies following the classification of ICOs as security offerings.
Mark Peter is a full-time member of the reporting team at Bitconews. He is a finance major with one five of writing experience. He has not held any value in Bitcoin or other currencies. He joins Bitconews as a freelance journalist, blogger and forex trader.
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