The Securities and Exchange Commission (SEC) continued its plan to increase enforcement of crypto asset sales by filing a complaint against Dragonchain for engaging in an illegal offer and sale of securities in violation of the Securities Act of 1933. Dragonchain Announces itself. as ”
The SEC alleges that in 2017, various entities and individuals related to Dragonchain conducted an unregistered offering of “Dragon tokens” (or DRGN) in which they raised approximately $14 million from thousands of investors around the world, including investors in the United States. The SEC further alleges that Dragonchain marketed these tokens as securities because, among other things, they promoted that the investment value of the Dragon tokens “would increase as the Dragonchain ‘ecosystem’ matures” and that the Dragon tokens would be listed on trading platforms. The SEC further alleges that Dragonchain and other entities then offered and sold about $2.5 million worth of Dragon tokens to cover business expenses to further develop and market their Dragonchain technology. The SEC complaint concludes that Dragonchain distributed its sale of Dragon tokens without registering them with the SEC as required under federal securities laws. Given the SEC’s ramping up of enforcement personnel for these types of token issuances, we can expect to see more enforcement on the horizon, including for tokens that have been traded for years, as is the case with the Dragon token.
The SEC’s statement on the action can be found here.
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