SEC Stops Registration of CryptoFed’s Ducat and Locke Tokens
Posted on 11/13/2021
The Securities and Exchange Commission (SEC) moved quickly and instituted proceedings against American CryptoFed DAO LLC, a Wyoming-based organization, halting the effectiveness of the company’s registration of two digital tokens as securities. The SEC’s Enforcement Division’s Cyber Unit alleges American CryptoFed made materially misleading statements and failed to provide legally required information in its registration form.
According to the SEC press release, “In the SEC’s order instituting proceedings, the Enforcement Division alleges that on Sept. 16, 2021, American CryptoFed filed a materially deficient and misleading registration form known as a Form 10, which purported to register two digital tokens issued by American CryptoFed – called the “Ducat” and “Locke” tokens – as equity securities. The Enforcement Division alleges that the Form 10 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. The Enforcement Division further alleges that the Form 10 contains materially misleading statements and omissions, including inconsistent statements about whether the “Ducat” and “Locke” tokens are securities, and statements relating to American CryptoFed’s purported intention to distribute (upon the effectiveness of its Form 10) its “Locke” tokens to the public using a Form S-8, which is a registration form used for securities offered to employees through employee benefit plans, without disclosing that the “Locke” tokens may not legally be distributed pursuant to a Form S-8.”
The SEC’s order institutes administrative proceedings to determine whether it is necessary and appropriate for the protection of investors to deny or suspend the effective date of American CryptoFed’s registration of the “Ducat” and “Locke” tokens.
According to CryptoFed CEO Marian J. Orr, Locke tokens will be distributed to municipalities, merchants, banks, crypto exchanges and other participants in the DAO. Orr was the first female mayor of Cheyenne, Wyoming. Orr joined American CryptoFed as CEO in January 2021.