- The most recent SEC filing also included the names of UpGlobal and Coinme founders and CEOs.
- Up Global and Coinme must request that other trading platforms remove the token from their services and publish a notice of the order.
On April 28, three parties involved with UpToken received cease-and-desist orders and fines from the U.S. Securities and Exchange Commission (SEC).
According to the SEC, Neil Bergquist, the founder, and CEO of Up Global and Coinme, participated in a cryptocurrency securities offering. In that offering, an Ethereum-based cryptocurrency called UpToken was sold through an initial coin offering (ICO), with the proceeds going towards the installation of new Coinme ATMs.
Coinme used a portion of the $3.65 million in cryptocurrency that the three parties successfully raised during the ICO to purchase new ATMs. As a result of purchasing UpTokens and using them at Coinme ATMs, users were eligible to receive discounts and rewards as a result. However, the SEC took issue with the fact that the participants sold securities without registering and without securing a registration exemption.
The SEC further asserted that Up Global and Bergquist made a misleading representation that Up Global would restrict the supply of UpToken and that Coinme would have to buy the asset back from investors, hence raising demand and the token value. In reality, Up Global and Bergquist managed to secure a significant amount of UpToken before and during the ICO.
Furthermore, Up Global and Bergquist misrepresented the amount of money raised, claiming that up to $18.9 million had been raised when in reality, only $3.7 million had been raised. As a result, all three parties must destroy all UpToken they own in accordance with the SEC’s order.
Additionally, Up Global and Coinme will have to request that other trading platforms remove the token from their services and publish a notice of the order. Further, the two businesses are forbidden from participating in any cryptocurrency security offerings in the future.
Bergquist will be permitted to trade other cryptocurrencies on a personal basis after barely three years of being prohibited from participating in crypto securities offerings. A fine to the SEC will also be paid by each party. CoinMe will contribute $250,000, Up Global $3.52 million, and Bergquist $150,000. These fines add up to about the same amount as the UpToken ICO’s total funding.