The Securities and Exchange Commission (SEC) has instituted administrative proceedings against the Wyoming-based organization American CryptoFed DAO LLC (American CryptoFed). The regulator is considering the issue of a stop order to suspend registration of the offering and the sale of two crypto assets, the Ducat token and the Locke token.

American CryptoFed filed a Form S-1 registration on September 17, 2021, in order to publicly offer securities. However, the SEC’s Enforcement Division alleges that the registration failed to contain required information about American CryptoFed business, management, financial condition and audited financial statements.

“American CryptoFed not only failed to comply with the disclosure requirements of the federal securities laws, but it also claimed that the securities transactions they seek to register are not in fact securities transactions at all.”

David Hirsch, Chief of the SEC Enforcement Division’s Crypto Assets and Cyber Unit

“An issuer seeking to register the offer and sale of crypto assets as securities transactions must furnish the required disclosure information to the SEC,” said David Hirsch, Chief of the SEC’s Enforcement Division’s Crypto Assets and Cyber Unit. 

Misleading statements

The Enforcement Division also said the registration contained misleading statements and omissions, and inconsistent statements on the tokens regarding security features.

“American CryptoFed not only failed to comply with the disclosure requirements of the federal securities laws, but it also claimed that the securities transactions they seek to register are not in fact securities transactions at all. The Enforcement Division is seeking to stop American CryptoFed’s registration to protect investors against misleading information.”

The Enforcement Division also alleges that American CryptoFed failed to cooperate during the examination of its registration statement.