Coinme Hit With $4M Penalty by SEC
The U.S. Securities and Exchange Commission (SEC) has issued Coinme, Up Global, and Neil Bergquist, who led both companies, with combined fines of nearly $4 million.
The fine, announced by the SEC on Friday, relates to the initial coin offering (ICO) of a crypto asset called UpToken. In its announcement, the SEC alleged that Coinme and Up Global misled investors in the 2017 ICO.
SEC Accuses Coinme of Misrepresenting UpToken
The defendants accepted the fine without admitting or denying wrongdoing. Coinme and Up Global will pay a combined $3.77 million, while Bergquist will pay $150,000.
Coinme operates a network of crypto ATMs where users can withdraw cash in exchange for Bitcoin and other cryptocurrencies.
Conceived as a reward for Coinme’s ATM customers, the firm states that it uses 1% of every transaction to purchase UpToken. The tokens are then given to customers in the form of a 1% cashback reward.
In its announcement of the settled charges, the SEC stated that Bergquist and Up Global took steps that would reduce Coinme’s need to purchase UpToken after the ICO.
It also accused parties of knowingly and, “knowingly or recklessly” publicly inflating the amounts raised by the ICO.
Bergquist has also been barred from acting as a director of a public company for the next three years.
5 Charged in HYDRO Token Manipulation Case
The SEC’s announcement comes days after the SEC won a major victory in another case.
Earlier this week, authorities in Miami revealed that five individuals have been charged in relation to a market manipulation case brought by the SEC. Those charged include the firm’s CEO and co-founder Michael Kane.
The court ruled that the defendants manipulated the market for HYDRO by artificially inflating it. It accused them of using a trading bot to place orders they had no intention of fulfilling. This created the illusion of investor interest, the court stated.
Hydrogen Technology and Kane are now liable to pay fines of $2.8 million and $260,000 respectively.
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