Coinme Faces $4-Million US SEC Fine Over Deceptive Crypto Offering

The SEC has been strictly regulating the cryptocurrency markets since Gary Gensler became its chair in 2021.

Investors were under the impression that Up Global would restrict the supply of UpToken while Coinme would create a continuous demand.

Coinme and its associated defendants, including Neil Bergquist, have been fined almost $4 million by the US Securities and Exchange Commission (SEC) for conducting an unregistered and deceptive offering of a cryptocurrency asset named UpToken. The SEC alleges that Coinme's Up Global department and Neil Bergquist, who headed both entities, misled investors in a late 2017 initial coin offering for UpToken.

Investors were under the impression that Up Global would restrict the supply of UpToken while Coinme would create a continuous demand for UpToken to finance a Bitcoin automated teller machine rewards programme, which would boost UpToken's price.

The SEC claimed that these statements were deceptive because Up Global had quietly conducted transactions that decreased Coinme's demand for UpToken. Additionally, the defendants falsely told investors that the offering had raised $10 million to $18.9 million despite knowing that it only raised $3.65 million.

Coinme and Up Global agreed to pay a combined $3.77 million, and Bergquist agreed to pay $150,000, without admitting or denying guilt.

The SEC has been strictly regulating the cryptocurrency markets since Gary Gensler became its chair in 2021. Gensler cautioned the House Financial Services Committee on April 18 that cryptocurrency markets were "rife with noncompliance" that jeopardised investors' safety and undermined trust in capital markets.

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