The SEC Stopped the token registration process for the American CryptoFED DAO that gained legal status in Wyoming earlier this year, but now it seems to have put “misleading” information on the filing so let’s read more in our cryptocurrency news today.
American CryptoFED became the first legally recognized DAO in the US this year but it already got into trouble with the regulators. The US SEC Stopped the token registration in the country from registering its crypto tokens as securities alleging that it put out “misleading information” to the future investors. American CryptoFed DAO LLC filed a Form 10 with the SEC that is used for registering securities for trading on some US Exchanges. However, according to the SEC, the form didn’t have enough information about the tokens named Locke and Ducat which the company aimed to issue. Required information about American CryptoFed was missing from the form as the SEC said in a statement.
Shot: Chaser: pic.twitter.com/mDgwwkGeWr
— Preston Byrne (@prestonjbyrne) November 10, 2021
American CryptoFed became the first decentralized autonomous organization in the US back in July and got legal status when it registered in Wyoming. The company runs on the EOS blockchain and said it wants to introduce a new monetary system to the US. In the crypto world, a decentralized autonomous organization is an organization which spreads out control to the token holders rather than relying on the paid hierarchy such as a typical company. DAOs tend to use the ETH blockchain to function but some have popped up on other smart contract-enabled networks.
Back in March, Wyoming passed a new bill to recognize DAOs as a limited liability company and it was the first state to do so adding to the state’s reputation as a crypto-friendly state. Wyoming welcomed crypto companies to the state in 2019 as it passed plenty of crypto-friendly bills that aimed to bring fintech innovators and even became the first state in the US to issue a crypto banking charter especially since Cynthia Lummis praised bitcoin a lot.
This is the first DAO LLC in Wyoming, American CryptoFed but ran into trouble and most were not able to issue the tokens at all. The SEC clarified:
“The SEC’s order institutes administrative proceedings to determine whether it is necessary and appropriate for the protection of investors to deny or suspend the effective date of American CryptoFed’s registration of the ‘Ducat’ and ‘Locke’ tokens.”
Kristina Littman as the SEC enforcement division’s cyber unit chief noted:
“We allege American CryptoFed made materially misleading statements and failed to provide legally required information in its registration form.”
The Wyoming DAO law faced a lot of criticism and Preston Byrne as the partner at Anderson Kill Law said that the law will be used by scammers to sell shitcoins and “half-baked code.” The law judge will decide whether to deny or suspend the registration of American CryptoFed’s tokens that pend further investigation.