CoinAlpha Advisors Receives Order To Pay $50,000 SEC Fine, Accompanied By “Cease And Desist”
The U.S. Securities and Exchange Commission has been quickly becoming more aggressive in their pursuance of cryptocurrency exchanges that don’t follow the protocols they’ve laid out. A recent example includes an order that was released on Friday for CoinAlpha Advisors LLC to cover a fine for an unregistered securities sale. CoinAlpha Advisors LLC is a fund manager.
Based on the published order, the firm will be required to cover a $50,000 fine for their transgressions. They created the fund back in October of last year, hoping to invest in digital assets. After communicating with entities that they hoped would become investors, they managed to accumulate over $600,000 in contributions.
At the time, CoinAlpha submitted a “Notice of Exempt Offering of Securities.” However, it was determined that they didn’t fall under the qualifications, and there was no other attempt to register with the SEC. Based on these facts, they broke the law by continuing on to solicit investors for securities. Furthermore, they did not follow the know-your-customer procedures, which would’ve been easy, considering that all of the investors were accredited. Still, a third-party was hired to evaluate these accreditations, so it looks as though CoinAlpha was attempting to follow protocols at the time, even if it ultimately didn’t complete the processes. Luckily, the SEC’s order shows that they’ve been cooperating with all of the authority’s demands so far.
In the order to CoinAlpha, the SEC demanded that they return all of the fees that investors contributed, saying,
“A total of 22 investors invested a total of $608,491 in the Fund. In October 2018, after being contacted by the Commission staff concerning the issues herein, CoinAlpha unwound the Fund, pursuant to the authority granted in the Fund’s Limited Partnership Agreement.”
Due to the cooperation from CoinAlpha, the SEC is only directly applying the sanctions that the two agreed upon. So far, the sanctions included that CoinAlpha cannot violate the Securities Act going forward, and the company must pay a $50,000 penalty to the SEC directly. The order noted that CoinAlpha has not admitted or denied what they’ve been accused of.