US District Judge

A US court has ruled in favour of the US SEC after the regulator’s filing of a motion seeking summary judgment against Kik for violating the country securities laws. Kik, which raised $100 million from 2017 ICO, had filed its own motion of summary judgment but the court refused to grant this.

In his judgment, US District Court Judge Alvin Hellerstein agrees with the US SEC’s contention saying “undisputed facts show that Kik offered and sold securities without a registration statement or exemption from registration, in violation of Section 5.”

In a suit filed on June 4 2019, the SEC sought the court’s relief “in the form of an injunction barring Kik from violating Section 5(a) and Section(c) of Securities Act, disgorgement of ill-gotten gains and financial penalties.”

On the other hand, Kik, which raised $50 million on the last day of a its pre-sale (September 11, 2017), filed a Form D with the SEC claiming this particular fundraising was exempt. In denying the allegations, Kik asserts “as an affirmative defence that the definition of an ‘investment contract’ is void for vagueness as applied to Kik.”

Still, the court ruled against it and subsequently ordered both parties “to jointly submit a proposed judgment for injunctive and monetary relief.”

Salt’s 2017 ICO Also Found to Violate the Securities Act

Meanwhile, in a different case, the SEC has secured an undertaking by Salt Lending Inc to reimburse investors that participated in the June 2017 token offering that raised $47 million. The regulator had similarly charged that Salt “violated Sections 5(a) and 5(c) of the Securities Act by offering and selling these securities without having a registration statement filed.”

However, “in anticipation of the institution of these proceedings,” Salt Lending Inc instead submitted an Offer of Settlement which the Commission has determined to accept.”

Meanwhile, the US regulator explains in the cease and desist order why it accepted Salt Lending Inc’s offer:

“In determining to accept the Offer, the Commission considered remedial acts undertaken by Respondent, including the fact that Salt returned several million dollars to investors and cooperation afforded to the Commission staff.”

Still, Salt Lending Inc is expected to issue a press release that notifies the public about the cease and desist order. In addition, the company must register the tokens as a class of securities.

More importantly, the company must inform “all persons and entities that purchased Salt Tokens from Respondent before and including December 31, 2019, of their potential claims under Section 12(a) of the Securities Act.” The order concludes:

Respondent shall, within ten (10) days of the entry of this Order, pay a civil money penalty in the amount of $250,000 to the Commission for transfer to the general fund of the United States Treasury, subject to Exchange Act Section 21F(g)(2). If timely payment is not made, additional interest shall accrue pursuant to 31 U.S.C. §3717.

Meanwhile, the SEC is expected to continue enforcing provisions of the Securities Act retrospectively as it seeks to assert its position. However, it remains to be seen if the regulator can successfully enforce the provisions of the law with respect to Defi tokens.

What do you think the SEC’s latest judgments? Share your thoughts in the comments section below.

The post ICO Aftermath: US Rules in Favour of SEC in $100M KIK Case – SALT to Reimburse Claimants From 2017 ICO appeared first on Bitcoin News.

US Man Pleads Guilty in $722 Million Bitclub Network Ponzi Scheme Case

A Bitclub Network Ponzi scheme promoter has admitted to charges of selling unregistered securities and to subscribing to a false tax return in connection with his role in the $722 million fraud scam. The man, Joseph Frank Abel, pleaded guilty by video conference before U.S. District Judge Claire C. Cecchi.

The U.S. citizen becomes the second person to plead guilty to charges relating to the scam after Romanian Silviu Catalin Balaci’s admission in July. Abel was initially charged by indictment in December 2019 along with four other co-defendants soon after their arrest.

According to the statement released by U.S. Attorney, Craig Carpenito, the defendant, and his accomplices operated “a fraudulent scheme that solicited money from investors in exchange for shares of purported cryptocurrency mining pools.” In addition, the scheme “rewarded investors for recruiting new investors into the scheme.”

Furthermore, the statement says Abel, who operated as the scheme’s large-scale promoter, “marketed and sold shares of Bitclub Network despite knowing that the network and its operators did not file a registration statement to register shares with the U.S. Securities and Exchange Commission.”

According to regulations in the United States, the conspiracy charge to which Abel pleaded, guilty carries “a maximum penalty of five years in prison and a fine of $250,000, or twice the pecuniary gain to the defendant or loss to the victims.”

The tax charge, on the other hand, carries a maximum penalty of three years in prison and a fine of $100,000. Sentencing is scheduled for Jan. 27, 2021.

However, the court statement suggests that the other four defendants initially charged along with Abel, are off the hook, at least for the time being:

The charges and allegations against the other defendants are merely accusations, and they are presumed innocent unless and until proven guilty.

From April 2014 through to December 2019, Abel and his accomplices operated the scheme which specifically targeted “dumb” investors. The operation, which grew to become one of the largest crypto Ponzi schemes, targeted countries in Asia, Africa, and Europe. Many lost invested funds when the scheme collapsed at around the same time directors were arrested.

What does the guilty plea by Abel mean for victims of the Ponzi scheme? Share your thoughts in the comments section below.

The post US Man Pleads Guilty in $722 Million Bitclub Network Ponzi Scheme Case appeared first on Bitcoin News.