UpToken price takes a hit after the US SEC fines Coinme

The price of UpToken (UP) has taken a hit after the US SEC fined the crypto ATM operator turned crypto exchange Coinme $4 million for violating US laws in its UpToken ICO.

The Securities and Exchange Commission (SEC) nabbed Coinme, its subsidiary Up Global SEZC and the CEO of both firms, Neil Bergquist for allegedly offering unregistered securities and giving “misleading statements” on its crypto token UpToken (UP).

Parties agreed to pay penalties

Up Global and Coinme were charged a $3.52 million penalty, which Up Global agreed to pay.

The SEC also levelled separate penalties against Bergquist and Coinme of $150,000 and $250,000 respectively, which both have agreed to pay.

According to the SEC, the Initial Coin Offering (ICO) of the UpToke (UP) conducted between October and December 2017 was an investment contract under the Howey test and was, therefore, an unregistered security offering rather than an ICO.

Increasing BTC ATMs

The ICO raised about $3.6 million for expanding Coinme’s fleet of Bitcoin (BTC) ATMs. And sure to its word, Coinme added 30 more ATMs using the funds raised from the ICO. However, the SEC said that Up Global and Bergquist made “false and misleading statements” about UpToken’s demand and the amount raised in the offering.

According to the SEC:

“Bergquist and Up Global took steps before and throughout the ICO to obtain an UpToken supply that would substantially reduce Coinme’s need to purchase UpToken after the ICO for the ATM rewards program.”

The SEC stated that Coinme sent 160 BTC, worth more than $1 million at the time, to an Up Global wallet that was used to receive investors’ funds during the ICO. Up Global then sent back about 14.5 million UP tokens at a discount to Coinme. This transaction, according to the SEC, “knowingly or recklessly” created the impression that a whale had made a huge UP purchase.

UpToken holders received benefits such as a 1% cashback in UP tokens and discounted fees when using Coinme’s ATMs.

In January 2019, Coinme partnered with Coinstar to use its cash-counting ATMs to facilitate cash-to-crypto transactions. By July 2019 Coinme had shut down all of its original BTC ATMs; something that was followed by Coinme stating that UpToken use had ended and that UpToken holders were no longer eligible for the previously described benefits.

The post UpToken price takes a hit after the US SEC fines Coinme appeared first on Invezz.