SEC fines CoinAlpha for selling unregistered securities, issues cease and desist

They’ve been fined $50,000.

The SEC has now issued cryptocurrency fund CoinAlpha with a $50,000 fine after allegedly selling unregistered securities.

The official order – published on Friday – states that CoinAlpha raised about $600,000  from 22 investors after establishing a fund in October 2017 to invest in digital assets. (via Coin Desk)

Investors reportedly purchased ‘limited partnership interests’ in the fund in exchange for a share of any profits gained from its digital asset investments.

Though CoinAlpha had filed a Notice of Exempt Offering of Securities in November of 2017, it was not granted an exemption from registration, but continued to solicit public interest in the securities offering, which is against two subsections of the Securities Act.

Despite collecting investor questionnaires and ‘representations from investors’ that indicated that they were accredited, CoinAlpha also failed to “take reasonable steps to verify that investors in the Fund were accredited investors,” the order states.

The order does, however, note that the company co-operated with the SEC after the Commission contacted it, and immediately stopped the offering and reviewed its website, social media and conference marketing resources.

It also recognises that CoinAlpha reimbursed all investor fees it had collected, surrendered its rights to future management and incentive fees, undid the fund and “made payments to ensure that no Fund investor suffered a loss.”

Consequently, the SEC have ordered CoinAlpha with a cease and desist from causing future violations to the Securities Act, as well as a $50,000 fine that must be paid within 10 days.

The SEC also recently delayed its key decision on the VanEck-SolidX Bitcoin ETF once again. Originally proposed this summer, the Commission has postponed its ruling several times, and now it has until 27th February to provide an answer.