SEC serves $4M in fines to Coinme over ‘misleading’ UpToken ICO
The United States securities regulator has handed down nearly $4 million in fines to crypto exchange Coinme for allegedly offering unregistered securities and giving “misleading statements” on its crypto token UpToken (UP).
On April 28 the Securities and Exchange Commission (SEC) said it settled charges against Coinme, its subsidiary Up Global SEZC and the CEO of both firms, Neil Bergquist.
Up Global agreed to pay a $3.52 million penalty, for which Coinme was also liable. Separate penalties against Coinme and Bergquist of $250,000 and $150,000 respectively were also leveled, which both have agreed to pay.
In its order, the SEC alleged Coinme, Up Global and Bergquist’s Initial Coin Offering (ICO) of UP between October to December 2017 was an investment contract under the Howey test and were subsequently unregistered securities offerings.
The ICO raised around $3.6 million to expand the amount of Bitcoin (BTC) ATMs in Coinme’s fleet, with which it added 30 ATMs using ICO funding. UP holders received benefits such as discounted fees and a 1% cashback paid in UP when using the ATMs.
In January 2019, Coinme changed its offering and partnered with Coinstar to use its cash-counting kiosks to facilitate cash-to-crypto transactions rather than its own ATMs. By July 2019 Coinme shut down all of its own ATMs.
“There is currently no use for UpToken, and UpToken holders can no longer use UpToken to obtain the benefits that were described in the UpToken offering materials.”
The price of UP has seen a significant drawdown since, with its market cap also falling to around $50,000 and 24-hour trading volumes topping just over $180.
Bergquist and Up Global also made “false and misleading statements” about the demand for UpToken and the amount
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