SEC moves against American CryptoFed token: CEO ‘confident’
Updated
The US Securities & Exchange Commission initiated proceedings against American CryptoFed DAO Wednesday, alleging its recent Form 10 filing contained “materially deficient and misleading information,” the regulator announced.
American CryptoFed CEO Marian Orr, however, told capital.com she is “very confident we did nothing illegal,” adding, “Nobody has been materially mislead. We have no investors.”
“In a letter to the SEC dated October 12, 2021, we rebutted point by point the deficiencies raised by the SEC,” Orr said in CryptoFed’s official statement released Wednesday afternoon. “The purported ‘deficiencies’ the SEC referred to were the lack of attributes inherent to securities.”
CryptoFed statement
“These are attributes that the two tokens (Locke and Ducat) of a decentralized blockchain-based CryptoFed DAO monetary system will never have,” the statement continued. “The SEC refused to respond to our rebuttal, although we repeatedly asked for their written response.”
“If the SEC is unready to make a declaration that CryptoFed’s two tokens (Locke and Ducat) are not securities, to meet the spirit of Securities Laws’ transparency and disclosure, we shall argue SEC should allow our Form 10 filing to become effective in time so that we may continue disclosing material and substantial information to the SEC, related parties and the general public.”
The SEC said in the release the proceedings essentially halt the pending automatic registration of a pair of crypto utility tokens, called Locke and Ducat, from becoming effective on 15 November, or 60 days after the initial filing date.
Outdated laws?
“Issuers attempting to raise money from the public must provide the information necessary for investors to make informed decisions,” said SEC Cyber Unit Enforcement Division Chief Kristina Littman in a statement issued by the SEC. “We allege American CryptoFed made materially misleading statements and failed to provide legally required information in its registration form.”
Orr admitted, however, as a result of the SEC’s enforcement action, “We’re probably not filing our 8-K on Monday.”
At issue, Orr said, was the rapidly changing crypto world is evolving under laws that were created in 1934. “In our dialogue (with the SEC) we asked specifically they (Locke and Ducat tokens) be recognised as a currency and not a security,” Orr said.
Martin Zerwitz and Michael Baker of the Cyber Unit are conducting the SEC’s investigation. Cyber Unit Assistant Director Deborah Tarasevich and Ms Littman are supervising the investigation.
A stable token
As previously reported by Capital.com, the SEC had asked the Cheyenne, Wyoming-based token issuer to withdraw its Form 10, asserting the firm failed to comply with the Securities Exchange Act of 1934, specifically sections regarding appropriate disclosures.
The Form 10 said American CryptoFed’s mission is to “create and maintain a monetary system with zero inflation, zero deflation and zero transaction costs.”
CryptoFed views its Ducats as “daily use currency,” an inflation and deflation protected stable token, as defined by the Personal Consumption Expenditures Price Index published monthly by the US Department of Commerce.
Ducats would be stabilised by buying and selling between Locke and Ducat “through ongoing open market operations similar to those of the (Federal Reserve),” Orr said in an earlier press release.
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