By George Ward
The United States SEC has commenced proceedings against a Wyoming-based DAO (decentralized autonomous organization), American CryptoFed. The proceeding aims to determine if to issue a desist order to suspend the company’s sale of its Locke and Ducat tokens.
The SEC stated that American CryptoFed’s Form S-1 application form from 2021 lacked the relevant data on the firm’s operations, financial standing, and management. As a result, on Friday, the US Securities and Exchange Commission (SEC) announced on its website that it had started investigating American CryptoFed.
According to the regulator’s Enforcement Division (ED), American CryptoFed submitted a Form S-1 registration file on September 17th, 2021. However, the regulator argued that the form did not contain important information about the company’s financial, managerial, and business conditions.
Additionally, SEC noted that the audited financial statements were not consistent. Furthermore, it contained omissions and inconsistent and misleading statements about the tokens.
The company did not state if the tokens were securities. Furthermore, the financial regulator alleged that the Wyoming-based organization did not cooperate with the ED during the registration examination.
Meanwhile, David Hirsch, an executive at the Crypto Assets and Cyber Unit, said token issuers that want to register the sales of digital assets as securities must meet specific requirements. In addition, Hirsch said such issuers must disclose certain information about their operations to the SEC.
US SEC Seeks To Protect Investors
“American CryptoFed refused to comply with certain disclosure requirements needed by SEC. Also, the securities transactions they want to register are not even securities. As a result, the agency wants to stop the company’s registration for the safety of investors,” the SEC post stated.
Besides, the recent FTX collapse has made regulators sit up. The United States is currently investigating the cause of the FTX saga. The primary goal is to protect investors as various “Ponzi crypto platforms” emerge.
According to reports, FTX had misused investors’ funds worth over $8 billion. Meanwhile, Michael Baker and Martin Zerwitz are in charge of the SEC’s ongoing case with American CryptoFed.
They are both members of the regulator’s Crypto Assets and Cyber Unit. In addition, other members of the SEC’s crypto tax force also act as supervisors for the investigation.
They include Deborah Tarasevich, Mr. Hirsch, and Jorge Tenreiro. Those in charge of the litigation include Mr. Baker, Mr. Zerwitz, Christopher Carney, and Christopher Bruckmann.