The SEC charged a digital asset incubator company and its founder with conducting an illegal $14 million securities offering of digital tokens and acting as an unregistered broker-dealer.
In a Complaint filed in the U.S. District Court for the Central District of California, the SEC asserted that ICOBox acted as an unregistered broker-dealer by actively soliciting and attracting investors to its clients' securities offerings in exchange for transaction-based compensation.
The SEC alleged that the company ICOBox and its CEO "expos[ed] thousands of investors to risky investments without providing the necessary information and protections required by the federal securities laws." According to the Complaint, ICOBox offered and sold digital assets ("ICO tokens") on the premise that the ICO tokens (i) could be swapped on its website for other tokens, (ii) would be immediately transferable, and (iii) would increase in value. However, ICOBox failed to register the offering or qualify for an exemption, claiming instead that the tokens were not securities or had an exemption from registration.
The SEC is requesting that the Court (i) enjoin the Defendants from further unlawful conduct, (ii) force the Defendants to disgorge all illicit proceeds, and (iii) require the Defendants to pay penalties for the securities law violations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
