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 companyâ€™s directors to a â€œfund administrator.â€
Unregistered Token Sale
In a statement announcing the cease and desist order, the SEC alleges that Shipchain, which â€œpromoted its company and the ICO through various media,â€ raised $27.6 million from a pre-sale held towards the end of 2017 and early 2018. The regulator explains:
The SEC insists that â€œtoken purchasers had a reasonable expectation of profits based on the efforts of Shipchain.â€ This expectation, as well as Shipchainâ€™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 companyâ€™s social media channels â€œwithin 10 days of the date of this Order.â€
In the meantime, the SEC statement states the Shipchainâ€™s executives have â€œdecided to cease all operationsâ€ due to the fact that â€œthe penalty represents substantially all of Shipchainâ€™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.
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