The U.S. Securities and Exchange Commission (SEC) issued a suspension of trading in the Securities of Nevada-based American Retail Group, also known as Simex Inc. According to a press release published October 22, 2018, the company falsely claimed that they partnered with an SEC-qualified custodian and had registered their token offering in accordance to SEC requirements and regulations.
American Retail Group Publishes False Claims About SEC Endorsement
The Nevada-based company published two press releases in August 2018 that claims that they received an endorsement by someone qualified by the SEC in regards to their cryptocurrency transactions and token offering.
While these statements build credibility for the company, the SEC noted that these are false claims as “the SEC does not endorse or qualify custodians for cryptocurrency, and investors should use vigilance when considering an investment in an initial coin offering,” said Robert A. Cohen, the Chief of the SEC Enforcement Division’s Cyber Unit.
The SEC also mentioned that under federal securities laws, they could suspend securities trading for ten days. Furthermore, they can also ban a broker-dealer from soliciting investors to purchase or sell the stock until the company complies with specific requirements.
SEC Releases an Investors Alert
Earlier this month, on October 11, 2018, the U.S. SEC released a letter, warning investors to watch out for false claims about endorsements and agency actions related to digital assets. These digital assets range from existing cryptocurrencies to new coins and tokens offered in initial coin offerings (ICOs). The SEC noted that fraudsters might use these false claims to boost the company’s legitimacy and reputation, artificially increase their value to trick investors into purchasing tokens or cryptocurrencies.
These claims include having advance knowledge of agency actions, using the SEC or CFTC name or seal on their promotional materials, or advertising that the company is working with agency officials. The SEC warns investors to be careful and skeptical of anyone who is attempting to sell digital assets or any investment that makes any claims about these organizations.
The SEC’s warning comes after the investigation that many cryptocurrency-related businesses are releasing false claims about their association with the SEC. In September 2018, the SEC was investigating Crypto Asset Management. The company claimed that it was registered and regulated with the SEC.
In early October 2018, they also reviewed Block Vest, a cryptocurrency startup that also mentioned that they received SEC approval and used the SEC logo to boost the legitimacy of their claim.