Cryptocurrency registration as securities rejected, SEC: Cease misleading cryptocurrency asset sales

In the past, the issuance of cryptocurrencies for fundraising was viewed as a daunting task, as many industry players were hesitant. This was because there are many regulations and restrictions when applying for registration or exemption from registration with the U.S. SEC. This is also one of the reasons why cryptocurrency operators are reluctant to be classified as securities. Only a few issuing teams choose to register as securities, becoming regulated cryptocurrencies subject to trading restrictions.

Cryptocurrency Registration as Securities Blocked

On 11/18, the SEC issued a announcement suing a company named American CryptoFed DAO, to determine whether to halt the sale of two tokens, Ducat, an algorithmic stablecoin, and Locke, a governance token.

The SEC's reasoning is that the company's Form S-1 registration statement filed in September 2021 failed to accurately describe its business model, company management, financial condition, audited financial statements, and contained materially misleading statements and omissions. The consistency of whether the tokens are securities was also in question. The company did not cooperate during the examination of its registration statement.

Opacity Leads to Registration Denial

SEC enforcement officials stated that American CryptoFed, by treating crypto assets as securities for issuance and sale, must disclose information to the SEC. The company claimed that the securities transactions they sought to register were not securities transactions, leading to the denial of the company's registration to protect investor interests.