- The SEC has initiated proceedings to suspend the registration of CryptoFed of America.
- The actions resulted from American CryptoFed’s failure to provide sufficient detail in its Form S1 filing statement.
- As a result, the first DAO will have a ban on the sale of Ducat and Locke tokens.
The Securities and Exchange Commission has initiated administrative proceedings against Wyoming’s decentralized autonomous organization, American Crypto Fed, to suspend the registration and sale of its digital assets, Ducat Token and Locke Token.
Previously, in September 2021, American Crypto Fed filed a Form S1 filing statement, which failed to include any required details about the platforms business, management, and financial systems.
In addition, the model was not clear enough to determine whether the tokens were securities; The data was misleading and even some omissions.
Significantly, the enforcement department claimed that CryptoFed did not cooperate during the evaluation of the filing statement, stating that it is necessary for any company seeking to issue crypto assets as securities to disclose the required information to the SEC:
While commenting on American CryptoFed’s failure to provide correct information, David Hirsch, Head of the Enforcement Division’s Crypto Assets and Cyber Unit, said:
Not only has American CryptoFed failed to comply with the disclosure requirements of federal securities laws, but it has also claimed that the securities transactions they seek to record are not, in fact, securities transactions at all. The Enforcement Division seeks to stop CryptoFed’s US registration to protect investors from misinformation.
Notably, in July 2021, Wyoming Secretary of State Edward Buchanan confirmed the authority’s recognition of the American CryotoFed DAO as a legal entity, adding that they are “proud to continue this innovation by offering legal protections to DAOs.”
However, after an inaccuracy is identified in the Form S1 data, American CryptoFed is at risk, as it faces the risk of losing its registration.
US S1 Registration Fails After CryptoFed; The sale of the at-risk token appeared first in the coin issuance.