The cryptocurrency exchange Coinme has been fined about $4 million by the US Securities and Exchange Commission for allegedly providing unregistered securities and making “misleading statements” about its cryptocurrency token UpToken (UP).
The Securities and Exchange Commission (SEC) announced on April 28 that it had reached a settlement with Coinme, its subsidiary Up Global SEZC, and Neil Bergquist, the CEO of both companies.
Up Global and Coinme were both responsible for the $3.52 million fine. Additionally, separate fines of $250,000 and $150,000 each were leveled against Coinme and Bergquist, and both have agreed to pay them.
In order to increase the number of Bitcoin (BTC) ATMs in Coinme’s fleet, the ICO raised about $3.6 million, with which it installed 30 ATMs. When using the ATMs, UP holders received advantages like reduced fees and a 1% cashback paid in UP.
Coinme modified its offering in January 2019 and collaborated with Coinstar to use the latter’s cash-counting kiosks in place of its own ATMs to enable cash-to-crypto conversions. Coinme closed all of its own ATMs by July 2019.
UpToken holders can no longer utilize UpToken to get the benefits that were mentioned in the UpToken offering papers because there is currently no purpose for it.
According to the SEC, Coinme sent 160 BTC, which at the time was worth over $1 million, to an Up Global wallet that was being used to receive ICO investor payments. Up Global “knowingly or recklessly” caused the impression that a third party made a sizable purchase by returning about 14.5 million UP to Coinme at a discount.
Another instance involved the assertion that Bergquist struck a deal for a 500 Bitcoin round-trip exchange of UP tokens with an undisclosed Hong Kong entity, with Coinme borrowing the money to buy more UP at a lower price. The transaction was also utilized to convey a sense of token demand.
According to the SEC, Bergquist didn’t confirm or reject the regulator’s conclusions, agreed to resolve the allegations, and was disqualified for three years from serving as an executive of a public business.
Coinme was contacted by Cointelegraph for comment, but no response was given right away.
