The US Securities and Exchange Commission (SEC) imposed a $50,000 fine on CoinAlpha Advisors LLC cryptocurrency fund after it found its business to be the distribution of unregistered securities.
According to a Friday order, CoinAlpha was founded in October 2017 to invest in digital assets. The company did apply for distribution of the securities under exceptional conditions, but did not have the right to do so, and declined to register with the SEC. Thus, CoinAlpha, in fact, was engaged in its activities in violation of the requirements of the law, the regulator said.
SEC also insists that the fund did not take sufficient measures to identify customers to make sure all its investors were accredited. It is known that CoinAlpha actually hired a third-party company to check the accreditation of investors, but only after the SEC contacted it.
The Commission reports that CoinAlpha returned all contributions to investors after the first contact. "A total of 22 investors invested a total of $608,491 in the Fund," the publication said.
Since the company assisted the regulator in the investigation process, the SEC decided to limit itself to the sanctions that were discussed with CoinAlpha in advance. They include refusing CoinAlpha to violate the law on securities in the future and a fine of $50,000, in addition to returning funds to investors. CoinAlpha did not admit her guilt and did not reject.
Earlier, SEC took action on ICO-startups Airfox and Paragon, which subsequently registered their tokens as securities, and the decentralized exchange EtherDelta. All companies collaborated with the regulator, thanks to which they managed to get off with relatively light punishment.
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