CoinMe has been fined nearly $4 million by the Securities and Exchange Commission (SEC) for offering unregistered securities and making misleading statements about its cryptocurrency token, UpToken (UP).
CoinMe Exchange Has Been Fined Nearly $4 Million by SEC
CoinMe and its subsidiary, Up Global SEZC, along with CEO Neil Bergquist, have been accused by the SEC of offering unregistered securities through their initial coin offering (ICO) of UP between October and December 2017.
CoinMe raised $3.6 million through the ICO, which aimed to expand its fleet of Bitcoin ATMs and promised UP holders perks such as discounted fees and cashback. However, in 2019, CoinMe switched to Coinstar’s cash-counting kiosks for cash-to-crypto transactions, leaving UP holders without their promised benefits.
The SEC also accused Up Global and Bergquist of falsely limiting the supply of UpToken and misreporting fundraising amounts. The defendants secured a significant supply of UpToken before and during the ICO, despite claiming otherwise. Furthermore, they allegedly reported fundraising amounts of up to $18.9 million, whereas only $3.7 million was actually raised.
Fines and Restrictions Imposed on Involved Parties
Following the SEC’s order, all three parties must dispose of any UpToken in their possession. Up Global and CoinMe must publish a notice about the order and request that other trading platforms remove the token from their services. They are also forbidden from participating in any cryptocurrency security offering indefinitely.
Bergquist is prohibited from participating in crypto securities offerings for three years, but he is allowed to trade other cryptocurrencies for personal purposes.
The SEC has imposed fines on each party, with Up Global paying $3.52 million, CoinMe paying $250,000, and Bergquist paying $150,000. The total amount of these fines is almost equal to the funds raised during the UpToken ICO.
Following the SEC’s announcement, the price of UpToken has declined significantly, with its market capitalization falling to around $50,000 and 24-hour trading volumes reaching just over $180.
CoinMe is a Seattle-based cryptocurrency exchange and Bitcoin ATM operator that was founded in 2014. It operates a network of over 5,000 Bitcoin ATMs across the United States and several other countries, making it one of the largest Bitcoin ATM networks in the world.
CoinMe’s Bitcoin ATMs allow users to buy and sell Bitcoin for cash quickly and easily, making it a convenient way for people to get into the cryptocurrency market.
In addition to its Bitcoin ATMs, CoinMe also operates a cryptocurrency exchange that allows users to buy and sell a variety of cryptocurrencies, including Bitcoin, Ethereum, and Litecoin, among others.
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