On 28th April, the United States Securities and Exchange Commission announced charges against Seattle-based firm Coinme Inc. According to reports, Coinme’s subsidiary Up, Global SEZC, and the Chief Executive Officer of both firms have been charged for willingly publicly inflating amounts raised in the initial coin offerings (ICO).
Neil Bergquist, Chief Executive Officer of Up and Global SEZC charged by the Securities and Exchange Commission conducts unregistered offers and trades of securities in the form of crypto assets called “UpToken”. Additionally, Bergquist was charged with making misleading statements related to the demand for UpToken. According to a report released by SEC, from October 16, 2017, to December 15, 2017, Neil Bergquist, Coinme, and Up Global indulged in unregistered or illegal sales of crypto asset securities. In that period, they marketed the financial gain that UpToken holders would experience if Coinme bought UpToken on the secondary market after the ICO.
The initial coin offering raised around $3.6 million to increase the 20 Bitcoin ATMs by using ICO funding. Coinme and Bergquist each agreed to pay separate penalties of $250,000 and $150,000. Additionally, the UP holders claimed benefits like discounted fees and some cashback paid in UP when using these Bitcoin ATMs. For those who are not aware, Up Global, and Begquist violated Sections 5(c) and 5(c) of the Securities Act of 1933.
In January 2019, Coinme entered into a partnership to sell Bitcoin at coin-counting kiosks wholly owned by Coinstar. Also, Coinme was the first Bitcoin ATM (BTM) operator to claim licensing registration in the United States in 2014.
According to the SEC, Bergquist and Up Global made “misleading and unclear” claims about the demand for UpToken and the amount raised in ICO. The United States Securities and Exchange Commission banned Neil Bergquist from acting as an officer or director of a public company for 3 years. Additionally, the SEC asserted that Coinme transmitted 160 BTC, which was valued at over $1 million at the time, to an Up Global wallet that was being used to receive investor money for the ICO.
Neil Bergquist was also charged for negotiating with an unnamed Hong Kong company a 500 Bitcoin round trip transaction of UpToken. SEC sent a strong message to offenders who violated the crypto-related regulations. It will help the United States to protect its citizens from any unforeseen potential mishaps related to crypto frauds in the future.
