United States SEC Sues Chicago Crypto Capital- Here’s Why
The Securities and Exchange Commission (SEC) in the United States has defendant Chicago Crypto Capital, for alleged sale unregistered crypto assets worth $1.5 million. These tokens were sold to unsuspecting investors from August 2018 to September 2019.
The SEC has alleged that Chicago Crypto Capital, a Chicago-based DeFi advisory firm, owner and president Brian B. Amoah, sellers Darcas Oliver Young and Elbert Elliott sold at least $1.5 million worth of crypto assets called BXY tokens to 100 investors.
What is the BXY token?
To understand the matter, we must first know the history of BXY tokens.
BXY is the original cryptocurrency of another Chicago-based crypto exchange Beaxy which is now defunct. In 2018, the exchange started selling BXY crypto-securities to a number of investors to raise capital for team expansion and project development.
Beaxy Exchange entered into an agreement with Chicago Crypto Capital, after which the latter began selling BXY tokens to investors. Under the agreement, Chicago Crypto Capital kept three cents for every five cents of tokens sold through it.
The SEC alleges many frauds
Chicago Crypto Capital was compensated with one surcharge of up to 150% on every BXY token sold. The investors were told that the capital would be used by Beaxy for its operations, marketing and other functions, but many of these funds were used for Amoah’s personal expenses, including travel and dining. Funds were also used to compensate the sellers of Chicago Crypto Capital and make investments in BXY tokens, the SEC claimed.
Chicago Crypto Capital not only informed the investors about the agreement with Beaxy while selling BXY tokens, but it also failed to deliver these tokens to any of these investors.
The persons mentioned above also made substantially false and misleading statements in the offer. They neither informed the investors about their individual investments in BXY nor about the financial and management problems that took place at Beaxy in 2019.
The SEC also stated that the BXY offering was not registered with the Commission and did not satisfy any exemption from registration. In addition, none of the Chicago Crypto Capital defendants were registered with the SEC as brokers.
Well, the SEC is trying to investigate the case further and prevent the defendants from offering crypto assets.
Just recently, SEC Chairman Gary Gensler echoed in one speech that the vast majority of crypto tokens are securities and their sale is covered by the securities laws. Non-security crypto tokens represent only a small number of tokens.
