In a first-of-its-kind occurrence, the United States Securities and Exchange Commission (SEC) has issued a cease-and-desist order to Crypto Asset Management, a California-based cryptocurrency hedge fund and its founder, Timothy Enneking, according to a CNBC report on September 11, 2018.
SEC Clampdown on Crypto-linked Hedge Fund
Per sources close to the matter, the US SEC has filed a cease-and-desist order and a fine of $200,000 to Crypto Asset Management and its founders for operating a digital assets management business in the US without registering with the agency.
According to CNBC, the SEC noted that the firm which tagged itself the ‘first regulated crypto asset fund in the United States,” with a massive $37 million in assets under management in December 2017, ‘willfully’ violated the statutes of the SEC by failing to obtain the required license for holding and trading securities
The SEC also reportedly said that Crypto Asset Management Fund solicits investors via its website, social media handles, and various other traditional medium and the firm has raised $3.6 million from 44 individual investors gotten from these channels.
Crypto Asset Management Fund Cooperates with the SEC
On receiving the SEC notice, the digital assets management company promptly ended its public offerings and offered buybacks to investors.
The founder of the firm, Enneking agreed to pay the fine amount charged by the SEC and obeyed the cease-and-desist order but failed to comment on the SEC allegations.
When CNBC reportedly requested for comments from Crypto Asset Management Fund, the firm claimed that the event is in the past now, adding that investors’ funds were never misappropriated.
“We have been fully in compliance with the SEC since shortly after they let us know they had concerns about two passages on our website,” said Enneking.
SEC not relenting on its Efforts to Sanitize the Cryptospace
While the US financial regulators have clamped down on a significant number of initial coin offerings (ICOs) and cryptocurrency projects in recent times, the Enneking case marks the first time the SEC is punishing a crypto hedge fund.
On September 11, 2018, the SEC slapped hefty fines and other penalties on TokenLot, the self-described “ICO Superstore’ and its founders, Lenny Kugel and Eli L. Lewitt, for operating as unregistered broker-dealers.
As reported by Blockchain Reporter on September 12, 2018, a U.S District Judge has ruled that the federal securities law applies to cryptocurrencies; therefore prosecutors can now proceed with the trial of Maksim Zaslavskiy, the founder of the REcoin and DRC scam ICOs.
