Blockchain technology startup Enigma MPC settles SEC charges - FinanceFeeds

Blockchain technology startup Enigma MPC settles SEC charges

Maria Nikolova

The regulator has charged Enigma MPC with conducting an unregistered offering of securities in the form of an initial coin offering.

The United States Securities and Exchange Commission (SEC) today announced settling of charges against blockchain technology startup Enigma MPC for conducting an unregistered initial coin offering (ICO).

Enigma MPC, based in San Francisco and Israel, raised approximately $45 million by selling 75 million digital tokens (“ENG Tokens”) in an ICO in the summer and fall of 2017. Enigma and its promoters told investors that Enigma would use the funds raised in the ICO to develop a digital asset trade-testing platform (the “Catalyst Application”) and to build a data marketplace for cryptocurrency-related data. Ultimately, as Enigma told investors, Enigma also planned to use ICO funds to develop a marketplace for other forms of data as well (the “Enigma DataMarketplace” or “DataMarketplace”).

Enigma paid promoters and others to tout Enigma as a good investment opportunity. Among other things, Enigma engaged in a so-called “bounty campaign,” offering ENG Tokens to third parties in exchange for promotion of the Enigma ICO and Catalyst through social media, blogging, or for translating Enigma promotional materials into other languages. Enigma also sought to generate more interest in its ENG Tokens by working to have the token traded on secondary market digital asset trading platforms. Enigma also told prospective ENG Token investors that it was engaged in such efforts.

The SEC’s order states that ENG Tokens are securities and that Enigma did not register its ICO as a securities offering pursuant to the federal securities laws and its ICO did not qualify for an exemption from the registration requirements.

The SEC’s order requires Enigma to cease and desist from committing or causing any violations of the registration provisions of the federal securities laws. Enigma agreed to a claims process that would result in a return of funds to investors who purchased tokens in the ICO. The company also will register its ENG Tokens as securities and file periodic reports with the SEC. Enigma has also agreed to a $500,000 penalty.

Enigma consented to the order without admitting or denying its findings.

Read this next

Industry News

John McAfee indicted on crypto fraud charges

This is only the first case brought by the CFTC for a manipulative scheme involving digital assets

Industry News

ASIC announces regulatory costs ahead of CFD trading restrictions

The Australian regulator “is acutely aware of the challenges facing many businesses due to COVID-19”, but made no reference to the challenges FX and CFD brokers will face amid the leverage restrictions.

Industry News

Top lawyers say 2021 will be record year for AML penalties

Federal regulators have imposed more than $200 million in penalties on corporations, just in the last two months.

Industry News

Swedish crypto conman pleads guilty to $16 million scam

Karlsson was extradited from Thailand and is facing a maximum sentence of 20 years for the wire fraud and securities fraud charges and another 20 years for the money laundering charge.

Industry News

ESG premium on corporate bonds of +5bps in Europe

The top issuers of ESG bonds and loans in 2020 were France, Germany, and Luxembourg, compared to France, the UK, and Spain in 2019.


Finastra gains access to NICE Actimize AML and fraud solution

The AI-powered platform provides AML and fraud solutions, with real-time behavioral analytics and machine learning capabilities.

Industry News

A new dawn in stock trading is here. Your brokerage should embrace it!

London looks set to capitalize on the latest global equities trend of Spacs – This could well be the new trend for electronic trading firms. We investigate how.

Industry News

SEC launches Climate and ESG Task Force

The task force will develop initiatives to identify ESG-related misconduct and use data analysis to mine and assess information across registrants, to identify potential violations.

Industry News

Mobile trading takes center stage: Is your brokerage doing what it takes?

Mobile trading has grown in popularity in recent years to the point it became indispensable for the trading industry. The lifestyle changes and mass retail adoption amid the COVID-19 pandemic made sure there is no going back.