SEC Orders Crypto ATM Operator to Pay $3.9M for Unregistered Token Sale | Orrick, Herrington & Sutcliffe LLP

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On April 28, the SEC reached a settlement with a cryptocurrency ATM operator for allegedly selling unregistered tokens to raise funds to expand its network of bitcoin ATMs. Described as a “token sale,” the SEC claimed respondents had in total raised crypto assets in an initial coin offering worth approximately $3.65 million. According to the SEC, the company offered and sold its token as investment contracts, which qualified it as a security, because investors would have reasonably expected to derive future profits from the token’s rise in value based on efforts. respondents. By offering and selling securities without having filed a registration statement with the SEC or benefiting from an exemption, the respondents violated Sections 5(a) and 5(c) of the Securities Act, said the DRY. In addition, one of the Respondents and its CEO have also been charged with violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 by making materially false and misleading statements and engaging in other fraudulent activities. behavior related to the supply and sale of the token. The respondents neither admitted nor denied the SEC’s findings, but agreed to pay a collective civil penalty of $3.92 million and said they would cease and desist from committing violations of the Securities Act. and the Securities Exchange Act. One of the individual respondents also received a three-year ban from officer and director.

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