- SEC sued Dragonchain for its unregistered ICO in 2017 when the company raised over $16.5 million.
- According to the SEC, Roets and Dragonchain offered their native token DRGN in a presale to the members of a crypto investment club in an ICO in October and November.
- In 2021, the State of Washington also filed a complaint against the company and fined $50,000 along with a cease and desist order.
The US Securities and Exchange Commission (SEC) is still working on its mission to put stricter constraints on crypto companies. In its new filing, the SEC has sued Dragonchain for issuing its native token DRGN in an unregistered ICO. The alleged ICO was launched in 2017 when the company raised approximately $16.5 million.
The petition accuses Dragonchain and Roets of breaching the Securities Act of 1933. The agency now demands that the defendants return the illegally acquired $16.5 million plus interest.
The SEC said,
Through this offering, the defendants allegedly raised approximately $14 million from approximately 5,000 investors worldwide, including in the United States.
The US regulatory body alleges that between 2019 and 2021, Dragonchain, Dragonchain Foundation, and The Dragonchain Company have issued and sold over $2.5 million worth of DRGN tokens to support their business expenses.
An ICO is an initial coin offering where the company raises funds in exchange for a new currency or token before it’s publicly released. However, the regulatory body says that the alleged transactions were made after the state regulatory agencies established that DRGN tokens are securities.
The SEC now demands that the Seattle-based company return the wrongfully acquired funds and comply with civil penalties.
In response to the current SEC fillings, Reots has issued a statement saying,
Many in the industry have had similar experiences and, as a result , have the impression that the SEC is picking and choosing projects to target, often singling out the ones with the biggest opportunity to disrupt incumbent interests while giving a free pass to others.
Reots has also pledged “to provide our clear argument for the existence and demonstrate that the commission should not charge any of these parties with intentional or unintentional violation of U.S. securities laws”.