The Securities and Exchange Commission(SEC) might have a lot of its place concerning the regulation of cryptocurrency token offerings, but that hasn’t stopped it from keeping effective oversight of the space.
According to an official statement published yesterday, the financial watchdog has ordered the shutdown of the Enigma Initial Coin Offering(ICO), after the firm was accused of having sold unregistered securities without getting approval.
Selling Securities Without Registration
The Enigma ICO was conducted back in September 2017. The firm, which is focused on enhancing the privacy of decentralized applications in the crypto space, raised about $45 million from the offering of its ENG tokens at the time, and over the past few years, the company has also made some significant partnerships- including one with global computer chip manufacturer Intel for the exploration and advancement of tech privacy.
The SEC is now coming for every cent of that capital raise. In its release, the agency explained that it would be charging the firm $500,000 for violating the Securities Act of 1933, adding that it would need to launch its “security” token the right way. That “right way,” as the release explained, involves returning all funds raised to investors, registering its token as a security, and filing periodic reports with the agency as well.
John C. Dugan, an Associate Director for Enforcement in the Boston Regional Office of the SEC, said in the statement, “All investors are entitled to receive certain information from issuers in connection with a securities offering, whether it involves more traditional assets or novel ones. The remedies in today’s order provide ICO investors with an opportunity to obtain compensation and provide investors with the information to which they are entitled as they make investment decisions.”
A spokesperson for the agency explained that investors interested in getting refunds in their investment could do so, although they also pointed out that investors who are happy with the investment can hold on to their ENG tokens while Enigma works to file for its securities the right way.
The SEC’s Reign on Crypto Terror Continues
It’s expected that Enigma will comply with the SEC’s ruling, especially considering how far the company has gone in its operation. Sadly, this just marks yet another successful attempt by the agency to put cryptocurrency tokens under its jurisdiction.
There have been several people who condemned this approach by the SEC, and some notable parties that have taken the agency to court over its approach to crypto regulations. The most crucial case right now, of course, is the one involving mobile messaging giant Telegram.
The SEC raised the same allegations over Telegram’s $1.8 billion ICO for its GRAM token last year, and since then, both parties have engaged in a public legal spat over whether the token is a security or a commodity. With both parties not willing to budge in this battle, it is expected that the resolution to the watershed case could go down to the wire.