Blockchain based supply and logistics company ShipChain has asserted that the company’s tokens are not securities, and that they did not receive any evidence of illegal activity from the South Carolina Attorney General’s Office.
Earlier on Tuesday, the blockchain startup received a cease-and-desist order from state regulators, which accused the company of distributing investment contracts under the guise of digital tokens, which are the only means of exchange on its platform. ShipChain was also allegedly unregistered with the Attorney General’s Securities Division as a broker-dealer.
In a public statement, Shipchain contend that if “the Commissioner's investigation, referred to in the order, had ever contacted ShipChain, ShipChain would have shown that its private sale of tokens was conducted in a manner consistent with applicable securities laws requirements.”
According to the company, they have not been “offering, issuing, or selling” tokens since January, before they located their software developing team to South Carolina. ShipChain also maintains that the tokens were sold exclusively to qualified investors, none of whom had any ties to South Carolina:
“…All offers of the tokens in that initial sale were made to institutions and persons who qualify as accredited investors; that none of the purchasers of SHIPs in that initial sale are South Carolina citizens or businesses; and that ShipChain is not aware that SHIPs were even offered in South Carolina or to any South Carolinian during the private sale,”- the company stated.
The startup may request a hearing within 30 days, where company representatives will have to prove why the sale of the tokens did not constitute a “distribution of unregistered securities”. Otherwise, ShipChain will be prohibited from conducting business transactions and "participating in any aspect of the securities industry in or out of South Carolina."
By Nadya Astam