U.S. securities regulator halts Wyoming crypto firm’s tokens

The seal of the U.S. Securities and Exchange Commission (SEC) is seen at their headquarters in Washington, D.C., U.S., May 12, 2021. REUTERS/Andrew Kelly/File Photo

WASHINGTON, Nov 10 (Reuters) – The U.S. securities regulator on Wednesday halted registration for two digital tokens offered by Wyoming-based American Cryptofed DAO LLC, accusing the company of providing misleading information to investors in regulatory filings.

The U.S. Securities and Exchange Commission (SEC) said in a statement that American Cryptofed “filed a materially deficient and misleading” form when it sought to register the tokens, known as “Ducat” and “Locke,” as equity securities. The disclosures did not contain required information about both the tokens and the company, and contained materially misleading statements, the SEC said.

The SEC alleged the company’s form left out the required information about the company’s business, management and financial condition, among other omissions, and also gave inconsistent statements about whether the tokens are securities.

American Cryptofed Chief Executive Officer Marian Orr disputed the SEC’s view that the tokens are securities and said the company had been trying to discuss the issue with the SEC when the agency refused to respond to the firm’s October rebuttal.

“The purported ‘deficiencies’ the SEC referred to were the lack of attributes inherent to securities,” she said in a statement. “These are attributes that the two tokens (Locke and Ducat) of a decentralized blockchain-based CryptoFed DAO monetary system will never have.”

The back-and-forth highlights the increasingly tense relationship between the cryptocurrency industry and the top U.S. markets regulator, which has taken a more aggressive position under Democratic leadership.

SEC Chair Gary Gensler appears to have taken a more expansive view of whether crypto assets fall under the SEC’s purvey. He has said the agency is examining cryptocurrencies in a number of areas and has described the crypto world as a “Wild West” riddled with fraud and investor risk. read more

Additional reporting by Susan Heavey, Editing by Chris Gallagher and Richard Pullin