SEC Press Charges: Two Crypto Companies Charged With Registration Violation

The Securities and Exchange Commission recently hit crypto hedge funds with dozen of penalties.

One of the hedge fund managers was charged with registration failures and misrepresentation which makes the SEC’s first legal action against an investment company. The owner of the company allegedly marked itself as a regulated crypto asset fund but it actually operated as an unregistered investment company.

Timothy Enneking, who is the owner, managed to raise more than $3 million in under 5 months under an unregistered public offering. By taking this action, Timothy Enneking broke multiple SEC regulations and he was served a cease letter. The company has since halted all operation and he agreed to pay the investors a $200,000 fine.

The other company to get hit by an SEC penalty was a company named Token Lot. This is also among the first cases to be charged as an unregistered broker/dealer for selling digital tokens in 2017. The company used to sell tokens after the DAO report in 2017 where investors were advised that digital securities must be compliant with federal law. Token Lot was run by Lenny Kugel and Eli Lewitt as a company for buying ICO tokens and it even processed more than 6,000 orders from various investors in more than 200 digital assets. These owners were not really registered as crypto brokers despite the fact that they are dealing in security tokens and also trade company profits for the same. Token Low was investigated in 2017 and the owners decided to stop all operations and refund all the investors the money they invested before.

The founders, however, didn’t deny nor admit the allegations.