SEC Shuts down Token buying Platform and charges Unregistered Owners

The United States Security and Exchange Commission (SEC) charged TokenLot for not complying with federal security laws.

TokenLot was a platform which was operating as an unregistered broker-dealer. The platform allowed the users to buy tokens during Initial Coin Offerings (ICOS). The SEC has charged the platform and its owner to sell digital tokens and deemed securities without being registered to do so. The SEC also has charged some other platforms such as Kugel and Lewitt for violating the registration provisions.

TokenLot was launched in July last year and closed in February this year. TokenLot was promoted by Eli L. Lewitt and Lenny Kugel as a platform for interested parties to buy tokens during ICOs. The users were also allowed to take part in the secondary trading. Till its closing, over 6,100 investors placed orders on the platform. Maximum transactions were executed after the regulators issued DOA Report stating that the platforms have to adhere legal requirements. The platform even described itself as an ICO Superstore as the platform was managing over 200 different tokens. According to SEC some of these tokens are recognized as securities. As the operations of TokenLot are already shut down, the website is showing a message, thanking its users and supporters and asking the investors to contact the TokenLot team if they have any refund dues.

Till now neither Lewitt nor Kugel have admitted or denied any wrongdoing. They are adhering the SEC request of refunding $480,000 to the clients. The promoters of TokenLot will also pay penalties of $90,000 and destroy the remaining digital assets. According to SEC, Lewitt and Kugel will be subject to penny stock bars which mean they will not be able to act as a promoter or be a part of the activities involving a broker for trading. They also have an investment company prohibition for at least three years. According to the co-director of the SEC’s Enforcement Division, Steven Peikin both Lewitt and Kugel are very cooperative. They have provided valuable information to the commission and taken the remedial actions suggested by SEC.

According to the co-director of SEC’s Enforcement Division, Stephanie Avakian the United States security law protects investors by broker-dealers and other gatekeepers via SEC oversight. These brokers can also be those who are offering initial coin offerings and secondary trading in digital tokens. SEC always encourage the people who are developing digital asset trading business to contact SEC staff for assistance in analyzing registration and other securities law requirements. SEC is actively working towards protecting the investors. Recently SEC has rejected Bitcoin ETF and cracked down frauds related to cryptos. SEC regulators have also suspended two exchange-traded notes for Bitcoin and Ethereum.