SEC suspends token registration of American CryptoFed DAO
The US Securities and Exchange Commission (SEC) has suspended the registration of digital tokens offered by Wyoming-based American CryptoFed DAO. Registration of digital assets will be halted until a formal administrative decision is made.
In addition to the suspension of tokens, proceedings are filed against the DAO on grounds of providing misleading information to investors in regulatory filings. The announcement by SEC purported that American CryptoFed has filed a “materially deficient and misleading registration form” to register its two tokens “Ducat” and “Locke” as equity securities.
Moreover, the SEC alleged that the registration did not contain essential information about American CryptoFed’s business, operations, and financial position, including audited financial statements.
In April 2021, Wyoming lawmakers passed a bill that officially recognized DAO as a legal entity. The bill, known as the Wyoming Decentralized Autonomous Organization Supplement, recognizes a DAO organized under the Wyoming Limited Liability Company Act.
Thereafter, American CryptoFed became the first DAO in the state to register as a legal entity in September.
“Issuers attempting to raise money from the public must provide the information necessary for investors to make informed decisions,” said Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit. “We allege American CryptoFed made materially misleading statements and failed to provide legally required information in its registration form.”
Founded in July 2021, American CryptoFed is a DAO formed by mobile banking company mSHIFT. The DAO was trying to issue two tokens – stablecoin ‘Ducat’ and governance token ‘Locke’.
Ducat is a stablecoin backed by the US dollar that would use an algorithm that aims for zero inflation and zero deflation. According to information offered by American CryptoFed, Ducat is used for daily transactions and as a means of storing value.
On the other hand, Locke is the governance token for American CryptoFed. Holders of the token will be able to vote on the operation and policy-making of the DAO.
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OhNoCryptocurrency via https://www.ohnocrypto.com/ @Gauri Bhatia, @Khareem Sudlow