- SEC initiated proceedings to suspend the registration of American CryptoFed.
- The proceedings resulted from American CryptoFed’s failure to provide sufficient details in the Form S1 registration statement.
- As a result, the first DAO would have a ban on the sale of its tokens Ducat and Locke.
The Securities and Exchange Commission initiated administrative proceedings against the Wyoming Decentralized Autonomous Organization, American Crypto Fed, to suspend the registration and the sale of its two digital assets, Ducat Token and Locke Token.
Previously, in September 2021, American Crypto Fed filed a Form S1 registration statement, which failed to include any required details on the platforms’ business, management, and financial systems.
In addition, the form wasn’t clear enough to identify if the tokens were securities; the statements were misleading and even had some omissions.
Significantly, the Enforcement Division claimed that CryptoFed hadn’t cooperated during the evaluation of the registration statement, mentioning that it is a necessity for any firm which seeks to issue crypto assets as securities to reveal the required information to the SEC:
While commenting on the failure of American CryptoFed to submit valid information, David Hirsch, the Chief of the Enforcement Division’s Crypto Assets and Cyber Unit said:
American CryptoFed not only failed to comply with the disclosure requirements of the federal securities laws, but it also claimed that the securities transactions they seek to register are not in fact securities transactions at all. The Enforcement Division is seeking to stop American CryptoFed’s registration to protect investors against misleading information.
Notably, in July 2021, Wyoming’s Secretary of State Edward Buchanan confirmed the authority’s recognition of American CryotoFed DAO as a legal entity, adding that they are “ proud to continue this innovation by offering legal protections to Decentralized Autonomous Organizations.”
However, after identifying the inaccuracies in the Form S1 statements, American CryptoFed is at risk, facing the threat of losing its registration.