- The SEC has suspended a trading firm for their false claims of distributing crypto assets through an SEC-approved offering.
- SEC’s Office of Investor Education and Advocacy has released a warning to investors about scams involving ICOs.
The U.S. Securities and Exchange Commission (SEC) has suspended a trading firm after the company created press releases claiming that they are linked with the SEC. The firm’s documents have revealed that the company claimed it was distributing crypto assets through an SEC-approved offering. They also said that they partnered with an SEC qualified custodian. This turned out not to be true.
SEC Warns of further scams
News about the case initially spread out in a press release and was eventually posted on the sec.gov’s website. According to the government agency, the company that got suspended was brought to their attention, claiming to be working with a custodian who would allegedly handle their cryptocurrency transactions.
The SEC’s Office of Investor Education and Advocacy (OIEA) released a warning, encouraging investors to be wary of potential scams involving companies engaging in Initial Coin Offerings or ICOs. In their statement, the Office says:
“Fraudsters often try to use the lure of new and emerging technologies to convince potential victims to invest their money in scams. These frauds include “pump-and-dump” and market manipulation schemes involving publicly traded companies that claim to provide exposure to these new technologies.”
The Company Behind the False Claims
The name of the company behind these false claims was reportedly American Retail Group Inc. The company released the two questionable documents in August this year. The documents’ circulation implied that they had the regulatory body’s approval to proceed with an ICO.
The incident has led into a creation of an educational website of SEC’s Office of Investor Education and Advocacy (OIEA). The website is about ICOs and can be used by investors as a reference when they have questions on the subject.
Robert A. Cohen, SEC’s Enforcement Division’s Cyber Unit Chief, has issued a press release warning investors to be on the lookout for unrealistic promises about the returns promised by ICOs. It also said that if the company claims that their projects are backed by the SEC, then they are most likely frauds.
Currently, there is no enforcement program for Initial Coin Offerings.