The Securities and Exchange Commission (SEC), after rejecting Bitcoin ETFs and causing numerous market downtrends, is now focusing on cryptocurrency hedge funds as well. Crypto Asset Management was hit with a $200,000 fine, and its founder Timothy Enneking has already agreed to pay it in order to settle the security law violation claims.
The reason behind the fine
This case marks the first time when the SEC takes actions against a crypto hedge fund. The commission states that the Crypto Asset Management actually failed to register as an investment company, despite being marketed as the first cryptocurrency fund that is fully compatible with US regulations.
The US watchdog has also issued a second order that is connected to the violation of investor-protection laws by broker-dealer TokenLot. The broker was marketed as a platform that serves as a direct link between investors and ICOs, but it didn’t register as a brokerage firm. Subsequently, the founders settled the case with by paying a $560,000 fine without additional comments. In addition, both of the founders of Token Lot will not be allowed to act as brokers for at least four years.
Battling fraudulent ICOs
The SEC once again shows its determination to battle crypto-related frauds. Back in May, the US watchdog launched a website called “HoweCoin,” the purpose of which is to give investors a textbook example of what a cryptocurrency scam should look like.
It is worth mentioning that Bitcoin and Ethereum are not considered to be securities while Ripple still awaits its verdict. However, the SEC clearly outlines that ICOs are securities. Hence, they should fall in line with respective security laws.
As U.Today reported earlier, over 800 coins died in just 18 months.