The SEC has halted registration for the Locke and Ducat crypto tokens being offered by Wyoming-based DAO American Cryptofed. The regulator said it was taking the action because it believes the company provided misleading information to investors in its regulatory filings, including ‘inconsistent statements’ about whether the tokens were securities on its official forms.
The SEC said that American Cryptofed “filed a materially deficient and misleading” form when it submitted an S-1 requesting registration for the Locke and Ducat tokens in September. Locke was designed as a governance token, while Ducat would have been a transactional token.
The SEC also said the submission failed to “contain certain required information about the two tokens as well as about American CryptoFed’s business, management, and financial condition, including audited financial statements.”
Cryptofed response to Locke and Ducat ban
American Cryptofed CEO Marian Orr naturally disagreed with the SEC’s view that the tokens are securities, saying the company had been trying to raise the issue with the SEC but the agency refused to respond to the firm’s rebuttal in October.
“The purported ‘deficiencies’ the SEC referred to were the lack of attributes inherent to securities…. These are attributes that the two tokens (Locke and Ducat) of a decentralized blockchain-based CryptoFed DAO monetary system will never have.”Marian Orr, CEO of American Cryptofed
After Wyoming passed a law allowing DAOs to seek state charter and official recognition as limited liability companies, American Cryptofed became the first of it’s kind in the state to take advantage of the new rules.
SEC all over crypto
SEC Chairman Gary Gensler appears to have taken a more expansive view of whether crypto assets fall under the SEC’s purvey, previously saying that the agency is examining a number of specifics around cryptocurrency, and describing the current world of the cryptosphere as like the “Wild West”, riddled with fraud and heightened risk for investors, and that he wants to see more regulation of the crypto space.