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The SEC Issues a Cease-and-Desist for Two Crypto Funds, The entire cryptocurrency industry continues to try and find some common ground with the US Securities and Exchange Commission in an effort to make digital currency a more mainstream entity in financial markets. Unfortunately, some of the issues surrounding illegal crypto activities give the industry a black eye with the broad-based investment community.
The first order was filed against Crypto Asset Management LP, which is also know as CAM. Its founder is Timothy Enneking. The other order was filed against TokenLot LLC and its two owners Lenny Kugel and Eli Lewitt.
The primary issue with CAM is actually with its subsidiary, Crypto Asset Fund LLC or CAF. The SEC stated that CAF “has never been registered with the Commission in any capacity.” As part of the cease-and-desist order CAM was fined $200,000 with the specification that it could be paid in installments over the next 300 days.
It is estimated that Enneking’s company had accumulated $37 million in assets at the end of 2017. It was also added in this report that the company had raised $3.6 million from 44 individual investors across 15 different states over the course of last year.
An additional quote on this matter from the SEC order was, “Although CAF met the definition of ‘investment company’ during the Relevant Period, it did not register with the Commission as an investment company, meet any statutory exemptions or exclusions from the definition of an investment company, or seek an order from the Commission declaring that it was primarily engaged in a business other than that of investing, reinvesting, owning, holding, or trading in securities.”
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There was also an issue with CAF positioning itself as the “first regulated crypto asset fund in the United States” with a registration statement with the SEC. Enneking downplayed the entire issue as “old news…We have been fully in compliance with the SEC since shortly after they let us know they had concerns about the two passages on our website.”
The specifics of the order against TokenLot LLC was centered against the company’s owners. It said that they had issued 40 tokens with earnings of $344,000 from two separate sales and neither sale was registered with the SEC. The company and its owners were fined in this matter. The company was fined $478,989 to be paid over a period of 360 days. Kugel and Lewitt were each hit with $45,000 fines.
The SEC continues to remain committed to ensuring cryptocurrency-related companies are properly registered with the Commission. The goal is to deter scams that are met to deceive or bilk investors through fraudulent activities. The Coingeek report goes on to mention Maksim Zaslavskiy, who was charged with defrauding close to 1000 investors with the sale of ‘REcoin’ and “Diamond’ products. An investigation uncovered that he never developed any cryptocurrencies as claimed.
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