Coinme hit with $4M fine over securities law violations

2 years ago

Coinme Inc. has become the latest target in the U.S. Securities and Exchange Commission’s (SEC) crackdown against digital currency bad actors after receiving a $4 million penalty from the regulator.

The SEC disclosed that the digital currency ATM provider had agreed to a settlement term with the commission after it violated securities laws. Coinme and its subsidiary, Up Global SEZC, were accused of offering unregistered securities to the public.

The SEC suspected both entities and their CEO, Neil Bergquist, of “making false and misleading statements” about the demand for their digital token to lure investors into their scheme. Investors were told they would gain from Coinme’s purchasing Uptoken after the initial coin offering (ICO) was completed.

“The order also finds that unbeknownst to UpToken investors, Bergquist and Up Global took steps before and throughout the ICO to obtain an UpToken supply that would substantially reduce Coinme’s need to purchase UpToken after the ICO, and also knowingly and recklessly publicly inflated amounts raised in the ICO,” according to the SEC.

Without admitting or denying the charges, Bergquist and his firms agreed to settle with the regulator. Aside from the payment of fines, Bergquist was slammed with a three-year ban from occupying the director role in a public company.

The SEC confirmed that its 2017 ICO amounted to securities based on the guidelines enumerated in the Howey test. Raising $3.6 million, Coinme beefed up its digital currency ATMs by an additional 30 and offered investors perks of 1% cashback and discount fees.

Barely two years after the ICO, Coinme’s investors were left in the lurch as the firm shut down all its ATM operations, with the SEC noting that “there is currently no use for UpToken.” Source

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