In its crackdown on cryptocurrencies, the SEC is now taking on Dragonchain
Unregistered titles – The SEC starts a legal battle against Dragonchain and three other people, due to an old ICO, which would be in violation of the current regulations.
The SEC wants to slay three dragons
The SEC has a memory like an elephant and is not ready to show mercy to the initiators of the ICO in 2017 who violated the rules in force. On August 16, the agency filed the lawsuit in the United States District Court for the Western District of Washington, against John Joseph Roets and three other organizations Affiliated with: Dragonchain, Dragonchain Foundation and The Dragon Company.
Four legal and natural persons are on the dock, who played a role in the pre-sale and ICO of DRGN tokens, which would then generate total revenue of $16.5 million. For this purpose, the regulator blames them for making an unregistered offer of securities.
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A classic legal pitfall for ICOs
The defendants allegedly violated Sections 5(a) and (c) of the hallowed Securities Act of 1933. The 2017 presale followed the SEC’s July report. After this event, the commission considered all subsequent ICOs, as potential offers of securities.
The penalties required by the regulator are relatively severe. These include, but are not limited to, “disgorging with pre-judgment interest” as well as civil penalties.
Reactions from Dragonchain and its founder
The SEC wants to cross swords with Dragonchain and presents its offensive arguments, but the accused does not think that the regulator is right. Dragonchain told media Decrypt, his disappointment with the agency’s decision.
For the company, this complaint would be based mainly on a “poor understanding of the technology and the facts”, stressing that the SEC team was not composed of engineers or developers, to be able to understand the approach adopted by Dragonchain at the time.
If the company takes tweezers in crisis communication, John Joseph Roets did not hide his anger towards the regulator, indicating that many players in the sector who “had similar experiences” would also “have the impression that the SEC picks and chooses projects to target “.
The commission would have companies in its search engine that “would most likely disrupt existing interests”, while giving other projects a pass.
SEC wants to add crypto business to its hunting list. She’s not done with Ripple and might even bite the dust, but the regulator doesn’t seem averse to another web3 legal tussle.
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