SEC issues Cease & Desist order against CoinAlpha

Maria Nikolova

The respondent violated Section 5(a) of the Securities Act, which prohibits the sale of securities through interstate commerce or the mails unless a registration statement is in effect.

The United States Securities and Exchange Commission (SEC) today issued a Cease & Desist Order against CoinAlpha Advisors LLC (CoinAlpha).

CoinAlpha, a Delaware limited liability company, was formed in July 2017 to act as the managing member of and manager to CoinAlpha Falcon LP. CoinAlpha Falcon LP (Fund) has never been registered with the SEC in any capacity. In October 2018, after being contacted by the SEC’s staff, CoinAlpha unwound the Fund.

CoinAlpha established the Fund in October 2017 for the purpose of investing in digital assets. From October 2017 through May 2018, CoinAlpha raised approximately $600,000 from 22 investors, residing in at least five U.S. states. Through the offering, the investors purchased limited partnership interests in the Fund in exchange for a pro rata share of any profits derived from the Fund’s investment in digital assets.

CoinAlpha filed a Form D Notice of Exempt Offering of Securities with the SEC on November 3, 2017. CoinAlpha did not file a registration statement with the Commission, and no exemption from registration was available for the securities offering during the Relevant Period.

According to the SEC, CoinAlpha did not have pre-existing substantive relationships with nine of the Fund’s investors and engaged in a general solicitation of public interest in the securities offering through CoinAlpha’s website, which was generally accessible without password protection. Furthermore, CoinAlpha engaged in general solicitation through blog postings, and media interviews and digital asset and blockchain conferences, accessible both via live attendance and through the Internet.

CoinAlpha earned both management fees from the Fund and was entitled to incentive fees based on the Fund’s investment performance. In 2017, Respondent received a distribution of management fees and incentive fees based on the Fund’s performance. In 2018, Respondent accrued management and incentive fees, but did not take any distributions from the Fund.

When contacted by the Commission staff, CoinAlpha immediately halted the offering and undertook a review of its website, social media postings, digital asset and blockchain conference marketing materials, and offering procedures. The company further voluntarily reimbursed all fees it had already collected, surrendered all rights to future management and incentive fees, unwound the Fund, and made payments to ensure that no Fund investor suffered a loss.

The SEC says CoinAlpha violated Section 5(a) of the Securities Act, which prohibits the sale of securities through interstate commerce or the mails unless a registration statement is in effect, and Section 5(c) of the Securities Act, which prohibits the offer to sell any security through interstate commerce or the mails, unless a registration statement has been filed as to such security with the Commission.

CoinAlpha is ordered to cease and desist from committing or causing any violations and any future violations of Sections 5(a) and 5(c) of the Securities Act. The respondent will also have to pay a civil money penalty in the amount of $50,000 to the SEC.

The respondent consents to the entry of the Order Instituting Cease-and-Desist Proceedings, without admitting or denying the findings.

Read this next

Digital Assets

Embarking on a Digital Currency Journey

Imagine you’ve stumbled upon a treasure map, leading you to untold riches hidden in the vastness of the internet. Instead of gold coins and jewel-encrusted goblets, this treasure comes in the form of digital currencies, the modern-day loot coveted by many.

Reviews

Traders Union Experts Share The Trading Analyst Review For 2024

Navigating options trading in rapidly shifting markets poses a considerable challenge. This is where options trading alert services become invaluable. They aid traders in keeping abreast of evolving opportunities and market trends. In this assessment, Traders Union experts scrutinize The Trading Analyst alert service to ascertain its efficacy. 

Digital Assets

BlockDAG’s Presale Achieves $9.9M: Aiming For A 5000-Fold ROI As Cardano’s Price Rises And Fantom Launches Sonic

Explore Cardano’s surge, Sonic’s efficiency, and why BlockDAG’s growth makes it the top crypto choice. A deep dive into the future of blockchain investments.

Digital Assets

US, UK probe $20 billion Tether transfers tied to Russian exchange.

U.S. and UK authorities are investigating the movement of $20 billion in the USD-pegged stablecoin tether (USDT) through Moscow-based exchange Garantex.

Digital Assets

BlockDAG Presale Raises $9.9M as Batch 5 Nears Sell-Out Amid Bonk’s Fluctuating Trading Volume & Spell’s Bullish Price

Explore BONK’s trading volume, SPELL’s market shifts, and why BlockDAG’s 10,000 ROI makes it an ideal crypto for savvy investors in 2024.

Digital Assets

Bybit expands into Europe amid regulatory scrutiny

Dubai-based cryptocurrency exchange Bybit is expanding its operations in Europe after encountering regulatory challenges in Hong Kong.

Digital Assets

Cathie Wood’s sponsored Bitcoin ETF sees historic $200 million inflows

The ARK 21Shares Bitcoin ETF (ARKB), co-sponsored by Cathie Wood’s ARK Invest, registered historic inflows exceeding $200 million on Wednesday, signaling a robust appetite among investors for Bitcoin-centric investments.

Digital Assets

Sam Bankman-Fried might see his 25-year sentence halved

Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was sentenced to 25 years in federal prison by a Manhattan court on Thursday. This comes after he was convicted of defrauding customers and investors, with Judge Lewis Kaplan highlighting the potential future risks posed by Bankman-Fried.

Technical Analysis

EURJPY Technical Analysis Report 28 March, 2024

EURJPY currency pair under the bearish pressure after the pair reversed down from the major resistance level 164.25, which also stopped the sharp weekly uptrend at the end of last year,

<