The SEC found the altcoin project guilty, which raised $16.5 million at the 2017 ICO. The regulator announced today that it is suing the project and its founders. After the news, the related altcoin went down in double digits.
SEC filings sue Dragonchain in over $16.5M ICO
The SEC has scrutinized yet another 2017 ICO with legal action. On August 16, the Securities and Exchange Commission sued a number of companies affiliated with Dragonchain and its founder, John Joseph Roets, for a pre-sale and ICO that brought in $16.5 million at the time. The Commission refers to the ICO as an unlicensed security offering. It also demands the return of the cryptocurrency along with the fine.
The ICO took place right after the SEC’s July DAO Report in 2017. The SEC will see more ICOs as possible securities offerings as a result of the landmark study. The SEC continues to take legal action against some of these proposals five years after the incident.
SEC’s allegations
The SEC claims that in 2017, Roets, Dragonchain, and the Foundation offered an unregistered Dragon (DRGN) in two phases:
- In August 2017, a discounted “pre-sale” took place to members of a crypto investment club.
- In October and November 2017, the ICO, marketed mainly to crypto investors, took place.
- Through this offer, the defendants raised approximately $14 million from nearly 5,000 investors worldwide, including the United States.
According to the SEC’s complaint, the defendants marketed the offer to crypto investors. Additionally, its staff and agents have publicly debated about DRGN’s investment value, pricing, and “listing” on exchanges, among other things. Later, between 2019 and 2022, Roets, Dragonchain, Foundation, and TDC allegedly offered and sold approximately $2.5 million worth of DRGN to cover commercial expenses to further develop and market Dragonchain technology.
The SEC’s complaint to the US District Court for the Western District of Washington accuses the defendants of violating Sections 5(a) and (c) of the Securities Act of 1933.
After the announcement, the altcoin price dropped more than 15%
Dragonchain DRGN, one of the 2017 ICOs under legal scrutiny by the SEC, is in free fall at the time of writing. DRGN is ranked 843 by market capitalization. It fell more than 15% after the SEC filed its lawsuit. DRGN is currently trading at $0.02173.
As we reported on Kriptokoin.com, the SEC has recently designated some altcoins as securities.
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