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A bitcoin company is ordered to pay back investors

| Feb 26, 2020 | Representing Investors |

The U.S. Securities and Exchange Commission (SEC) announced on Feb. 19 that they have ordered a cryptocurrency company Enigma MPC to return initial coin offering (ICO) funds to its investors. The federal agency is also ordering the blockchain startup to pay fines. The SEC argues that the company violated federal securities laws when it offered its Erthereum token known as ENG up as an ICO.

Enigma MPC first put ENG up for ICO in November 2017. That initiative resulted in the company raising $45 million. The value of the tokens quickly increased then plummeted within a matter of a few short weeks. The cryptocurrency is now ranked #120 among bitcoin. The company is valued at $38 million.

The sudden increase and sharp decline in the value of this ICO caught the SEC’s attention. The federal agency has since classified this bitcoin as security. Government officials contend that anyone offering securities is supposed to notify their investors of how to cash out their shares to receive compensation. The SEC alleges that Enigma’s investors weren’t informed of this though.

An SEC spokesperson pointed out that it was Enigma MPC’s obligation to provide investors with the information necessary to make wise investment decisions as well.

Enigma MPC’s leadership brokered a deal with the SEC whereby they’ll repay investors the money that they’d invested as well as a $500,000 fine.

Blockchain companies have long gone unregulated by the federal government. This latest SEC action leaves many cryptocurrencies wondering whether they’ll be able to continue to operate under the radar though. If these new digital tokens start being classified as securities and are regulated by the federal government, then this will very much change the playing field for all parties involved.

If you’ve been taken for a ride by blockchain company here in Louisville or anywhere else in Kentucky, then an attorney can help you recover what you may have lost.