Shipchain has been fined by the US Securities & Exchange Commission (SEC) to the tune of US$ 2.05 Million. SEC found that Shipchain was offering unregistered crypto tokens without its prior permission. Orders Shipchain to cease-and-desist from issuing further tokens.
Shipchain is an online logistics and transport platform developed on the basis of blockchain technology and registered with SEC.
In a recent announcement, SEC had informed that Shipchain was found in conducting activities that were against the law. SEC informed that Shipchain publicly promoted its business as well as its Initial Coin Offering (ICO) through paid promotions. It said that while promoting the company was legal, but ICOs offering was illegal. SEC alleged that the ICO offered by Shipchain was an unregistered security and that no permission was sought from the regulator. Therefore the funds generated from the sale of ICOs by Shipchain had to be accounted for.
It was pointed out by SEC that in 2017 and 2018, Shipchain had collected US$27.6 Million from the sale of ICOs. It was also pointed out that since then Shipchain had managed to sell around 145 million of its Ship Tokens. SEC also determined that out of 145 million sales, US consumers contributed about US$ 27.6 Million approximately. US consumers purchased Ship Coins through fiat currencies as well as through Bitcoins, Ethereum, and others, informed SEC.
SEC further alleged that the status of Ship Tokens suggested that they were securities. As per US law, no securities can be traded until and unless the same were registered, said SEC. Thereafter, under Section 5(a) and (c) of the Securities Act, a penalty had been imposed upon Shipchain. It was reported that an amount of US$2.05 had been ordered to be paid by Shipchain as a penalty for illegal trading.
Furthermore, SEC ordered Shipchain to immediate cease-and-desist from any trading of its Ship Tokens.
In response to the imposition of fine, Shipchain had unconditionally agreed to pay the fine of US$ 2.05 Million. Shipchain had also announced that it will publicly disseminate information regarding its ceasing and desisting from token trading. It was also agreed by Shipchain that it will make sure to comply with the order within the next 10 days.
Within this month, this is the third crypto/blockchain company that had been subjected to imposition of penalty by SEC.
One of the most debatable dispute had been between SEC and Ripple (XRP). Recently, SEC had initiated a lawsuit against Ripple and its executives. In the lawsuit, SEC had raised the similar issue that Ripple had offered unregistered securities and claimed US$ 1.3 Billion. However, Ripple had also decided to contest the issue and stated that SEC had been abrogating its authority. Garlinghouse, an executive of Ripple, claimed that SEC had targeted the entire crypto industry by lodging a suit against Ripple.