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US President Set to Sign New Crypto Legislation in Less Than a Year

The Securities and Exchange Commission (SEC) has imposed a penalty of $4 million on Coinme and has issued a cease and desist order against them for their affiliation with UpToken, which was advertised and sold as an unregistered security. The SEC has likewise imposed fines and orders on two other entities associated with UpToken. 

As per the order, Coinme is required to discontinue the sale of UpToken and give investors the opportunity to repurchase their tokens. The SEC has taken this action to protect the interests of investors and ensure that companies comply with the applicable securities regulations.

The SEC Filed Document 

According to a document filed with the SEC, Coinme and its Up Global unit have been subjected to a cease and desist order under the U.S. Securities Act and the Securities Exchange Act. The case dates back to 2017 when the firms conducted an ICO for their UpToken, which raised more than $3.6 million. The funds were utilized to expand the Bitcoin ATM network and for several other corporate purposes. 

The SEC found that the UpToken was sold as investment contracts, thereby classifying them as securities under the Howey Test. The regulator cited the additional benefits offered to UpToken investors to bolster its case against the firms. The firms were accused of selling securities without registration and artificially inflating demand by limiting the token supply. The CEO of Coinme, Neil Bergquist, was also named in the complaint.

Coinme Settlement Offer

Coinme has reportedly taken proactive measures by proposing a settlement to address potential enforcement measures by the securities regulator. The proposed settlement terms include a penalty of $3.52 million to be paid by Up Global and a $250,000 fine imposed on Coinme. Furthermore, CEO Neil Bergquist has been ordered to pay a civil penalty of $150,000, bringing the total settlement amount to almost $4 million.