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Pro Tip: Don't Falsely Claim Your Custodian is 'SEC-Qualified' For Crypto Transactions
FinTech, Blockchain, Financial Services
When you consider the biggest no-no’s that you could do as a financial services company trying to promote your product or service, you’d have to think that falsely making claims of endorsement from the Securities and Exchange Commission has got to be pretty high up there.
This is especially true when you’re promoting anything having to do with cryptocurrencies.
Such was the, uh, mistake made by a Nevada-based company called American Retail Group (aka Simex, Inc.), which “claimed that the company had partnered with an SEC qualified custodian for use with cryptocurrency transactions that would be ‘under SEC Regulations,’ and that the company was conducting a token offering that was ‘officially registered in accordance [with] SEC requirements,'” according to a press release from the SEC.
There’s only one problem with this, as the SEC points out:
“The SEC does not endorse or qualify custodians for cryptocurrency, and investors should use vigilance when considering an investment in an initial coin offering,” Robert A. Cohen, Chief of the SEC Enforcement Division’s Cyber Unit, said in a statement.
The American Retail Group apparently made its claims in two separate press releases that went out in August. The SEC suspended trading in the securities of the company, which it can do for 10 days under federal securities law, and “generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met.”
The agency actually just recently published an investor alert warning about companies promoting digital asset investments with false claims of endorsements from the SEC and the Commodity Futures Trading Commission.
Photo: Getty iStock