SEC Imposes Cease-and-Desist Order Against Crypto Fund Manager ‘CoinAlpha Advisors’

[PRIBO247]

The U.S. Securities and Exchange
Commission (SEC) issued a cease-and-desist order against
unregistered crypto fund manager "CoinAlpha Advisors LLC",
under the terms of which a "civil money penalty in the amount of
$50,000" must be paid to the SEC.

According to the SEC's order, here are the essential facts:

* CoinAlpha Advisors ("CoinAlpha"), a Delaware LLC with its
main place of business in Sunnyvale, California, was
established in July 2017 to act as the manager for the
"CoinAlpha Falcon" crypto fund.

* CoinAlpha Falcon LP ("Fund") has never been registered with
the SEC.

* 22 investors put a total of $608,491 into the Fund.

"In October 2018, after being contacted by the Commission
staff concerning the issues herein, CoinAlpha unwound the
Fund, pursuant to the authority granted in the Fund’s Limited
Partnership Agreement."

"From October 2017 through May 2018, CoinAlpha "raised
approximately $ 600,000 from 22 investors, residing in at
least five U.S. states," and via this 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."

On 3 November 2017, CoinAlpha filed a Form D "Notice of
Exempt Offering of Securities" with the SEC, but it "did not
file or cause to be filed a registration statement with the
Commission," and "no exemption from registration was
available for the securities offering" during the
aforementioned period.

CoinAlpha "did not take reasonable steps to verify that
investors in the Fund were accredited investors."
CoinAlpha "controlled and directed the investment of the
Fund’s assets."

As soon as it was contacted by the Commission staff,
CoinAlpha (1) "undertook a review of its website, social
media postings, digital asset and blockchain conference
marketing materials, and offering procedures"; (2)
"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".

CoinAlpha's conduct "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 was 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" and to pay $50,000 "civil money
penalty" to the SEC.

It is worth noting that the the main reason for such a relatively
small penalty is that CoinAlpha prompty took remedial action
and cooperated with the Commission staff.

Source : https://www.cryptoglobe.com