2017 ICO, Bitcoin, cease and desist order, Digital Assets, ether, Securities Act Section 5(a), Ship token, Shipchain, Social Media, The US Securities and Exchange Commission

The US Securities and Exchange Commission (SEC) has issued a cease and desist order against Shipchain and ordered it to pay a penalty of $2.05 million. Additionally, the regulator has directed Shipchain, a shipping and logistics company, to transfer Ship tokens in the possession or control of the company’s directors to a “fund administrator.â€

Unregistered Token Sale

In a statement announcing the cease and desist order, the SEC alleges that Shipchain, which “promoted its company and the ICO through various media,†raised $27.6 million from a pre-sale held towards the end of 2017 and early 2018. The regulator explains:

The SEC insists that “token purchasers had a reasonable expectation of profits based on the efforts of Shipchain.†This expectation, as well as Shipchain’s many promises to buyers, means the Ship token sale met the threshold of a security offering. Yet according to the SEC:

Accordingly, the regulator says the Ship token pre-sale violated Section 5(a) and 5(c) of the Securities Act which forbids the soliciting for funding without registration and approval by the SEC.

Shipchain Ceasing All Operations

In the meantime, Shipchain has agreed to cooperate with the SEC by undertaking to assist in the process of permanently disabling the Ships tokens. The company has also agreed to publicize the cease and desist order on its website and via the company’s social media channels “within 10 days of the date of this Order.â€

In the meantime, the SEC statement states the Shipchain’s executives have “decided to cease all operations†due to the fact that “the penalty represents substantially all of Shipchain’s net assets.â€

Do you agree with the SEC charges and the penalties imposed on Shipchain? You can share your views in the comments section below.

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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