The U.S. SEC continues its strict policy towards the still unregulated crypto-scene. With the first-ever action against a crypto- investment company, the SEC is once again demonstrating zero tolerance when it comes to investor protection and false public statements to potential investors. As a consequence, the SEC has ordered the shutdown of this investment company and a fine against the operator.
The U.S. Securities and Exchange Commission (SEC) yesterday announced its first-ever enforcement action finding an investment company registration violation by a crypto-hedge fund manager based.
The SEC found that Crypto Asset Management LP (CAM) offered a fund that operated as an unregistered investment company while falsely marketing it as the “first regulated crypto asset fund in the United States.” According to the SEC’s order, the California-based CAM, and its sole principal Timothy Enneking raised more than $3.6 million over a four-month period in 2017 with false claims regarding its regulation by the SEC.
By conducting an unregistered non-exempt public offering and investing more than 40 percent of the fund’s assets in crypto-securities, CAM caused the fund to operate as an unregistered investment company. After being contacted by the SEC staff, CAM ceased its public offering and offered buy backs to affected investors.
“Hedge funds seeking to ride the digital asset wave continue to proliferate,” said C. Dabney O’Riordan, Co-Chief of the Asset Management Unit. “Investment advisers must be sure that the funds they offer adhere to the applicable registration obligations and must accurately represent their funds’ regulatory status to investors.”
CAM and Enneking agreed to the SEC’s cease-and-desist order and censure without admitting or denying the findings against them, and agreed to pay a penalty of US$200,000.