The U.S. Securities and Exchange Commission (SEC) has issued a cease and desist order against Shipchain and ordered the payment of a $ 2.05 million fine. In addition, the regulator has ordered Shipchain, a shipping and logistics company, to transfer Ship tokens held or control of the company’s directors to a “fund manager.”
Unregistered Token Sale
In a statement With the announcement of the stop-and-desist order, the SEC claims that Shipchain, which “promoted its company and the ICO through various media,” raised $ 27.6 million from a pre-sale held in late 2017 and early 2018. The regulator explains:
In total, Shipchain has sold approximately 145 million Ship tokens to more than 200 people or groups of people, including US individuals, for approximately $ 27.6 million (consisting of fiat currency and digital assets, such as Bitcoin or Ether, valued at the time of receipt).
The SEC maintains that “token buyers had a reasonable profit expectation based on Shipchain’s efforts.” This expectation, as well as Shipchain’s many promises to buyers, means that the Ship token sale has reached the threshold of a security offering. But according to the SEC:
Shipchain’s offer and sale of Ship tokens was not registered with the Commission, nor did Shipchain’s offer and sale of Ship tokens comply with any valid exemption from registration.
Accordingly, the regulator says the Ship token pre-sale violates sections 5 (a) and 5 (c) of the Securities Act, which prohibits requests for funding without SEC registration and approval.
Shipchain ceases all operations
In the meantime, Shipchain has agreed to work with the SEC by committing to assist in the process of permanently disabling the Ships tokens. The company has also agreed to publish the strike and termination injunction on its website and through the company’s social media channels “within 10 days of the date of this injunction.”
In the meantime, the SEC statement states that Shipchain executives have “decided to halt all operations” due to the fact that “the fine represents substantially all of Shipchain’s net assets.”
Do you agree with the SEC charges and sanctions imposed on Shipchain? You can share your thoughts in the comments section below.
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