The U.S. Securities and Exchange Commission (SEC) has instituted an action against Chicago Crypto Capital LLC (CCC) and its principal members on charges of suspected fraud and violating existing security laws.
The owner of the firm, Brian Amoah, and former sales persons Oliver Young and Elbert Elliot stand accused of defrauding investors of $1.5 million. The SEC’s statement disclosed that the trio offered nearly 100 individuals BXY tokens, many of whom had no prior experience with digital assets.
The commission claimed that the defendants “acted as unregistered broker-dealers and conducted an unregistered offering of BXY tokens.” CCC failed to register with the securities watchdog and did not satisfy the requirements for an exemption, a clear breach of sections 5, 15, and 17 of the Securities Act of 1933.
“In addition, the SEC alleges that each of the defendants made materially false and misleading statements in the offer, purchase, and/or sale of BXY tokens, including about the custody and delivery of BXY,” read the SEC’s report.
As a result of the misrepresentation, scores of investors never received their tokens, while those that received theirs had no option but to pay a markup.
The SEC confirmed that it had accepted an offer for settlement from Young in which he pledged to pay disgorgement and a civil penalty. The Commission says it will seek “injunctive relief, disgorgement with pre-judgment interest, and civil penalties” for the other parties.
BXY tokens went live in September 2019 and reached a peak of nearly $0.02, but three years later, their worth plunged to less than one-thousandth of a dollar, leaving investors deep in losses.
Policing the wild, wild west of digital assets
The Gary Gensler-led SEC has been on a wild rollercoaster ride in its attempts to regulate the fledgling industry. The regulator has slammed the tag of securities on several digital assets and has been embroiled in several legal requirements with issuers of tokens.
Perhaps, the most famous case of the SEC is its case with Ripple Labs, issuers of XRP, which has been running since December 2020. A case with ex-Coinbase (NASDAQ: COIN) staff for insider trading of digital assets is gathering steam while it is still pursuing lawsuits against firms that played a role in the 2017 initial coin offering boom.
The SEC has amplified calls for issuers to be registered with the body and has expanded its digital assets monitoring unit in a valiant attempt to police the industry.
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