SEC Suspends Trading in Company for Making False Cryptocurrency-Related Claims about SEC Regulation and Registration

October 23

Last week we reported that the US SEC stopped a fraudulent ICO that falsely claimed that it had SEC approval.  Yesterday, the SEC suspended trading in the securities of a company amid questions surrounding its statements about partnering with a claimed SEC-qualified custodian for use with cryptocurrency transactions and a purportedly registered public offering of preferred stock.

The SEC’s trading suspension order says that two August 2018 press releases issued by Nevada-based American Retail Group, Inc., aka Simex, Inc., claimed that the company had partnered with an SEC qualified custodian for use with cryptocurrency transactions that would be “under SEC Regulations,” and that the company was conducting a token offering that was “officially registered in accordance [with] SEC requirements.”

The Chief of the SEC Enforcement Division’s Cyber Unit reminded the public that “the SEC does not endorse or qualify custodians for cryptocurrency, and investors should use vigilance when considering an investment in an initial coin offering.”

Under the federal securities laws, the SEC can suspend trading in a stock for 10 days and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock again until certain reporting requirements are met.

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David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. He is currently the Chairman of the Litigation Department of the firm’s New York office. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. Since 2008, David has been included in Chambers for his expertise in international arbitration.

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