SEC, NYAG $500M Crypto Enforcement

On Sep. 13, SEC, NYAG acted on crypto and stock issuance violations.

  • NYAG reported $500M recovered re cryptocurrency and stock issuance violations.
  • Defendants: GTV Media Group, parent Saraca Media Group with prior ties to Steve Bannon and Chinese billionaire Guo Wengu that served as a non-executive director.
  • Simultaneous to SEC complaint vs. GTV, Saraca, Voice of Guo Media, Sep. 13, 2021.
  • SEC violations of SEA 1933 Section 5 registration, interstate commerce (15 USC 77e).
  • Alleged Violations
  • Between Apr. 2020-Jul. 2020, the DE-based GTV failed to register stock issuance as a registered securities dealer with the State in violation of business law, NY GBL 359-(e).
  • Offering was for 10% of Saraca equity stake in GTV, 20M-200M shares at $1/share.
  • GTV, Saraca also initiated pre-offer and sale of crypto/digital tokens G-Coin, G-Dollar.
  • Token offer, as security/commodity, without registration as B/D, breach GBL 359-(e).
  • About $34mn collected from digital coin offering investors on social media platform including YouTube and Twitter, with promise coins convertible to fiat currency.
  • SEC cease-and-desist further sites Voice of Guo (VOG) that sold $114mn in GTV stock.
  • Proceeds from sale invested in hedge fund specializing in futures and options on HKD.
  • Investors often paid via online platforms such as ApplePay, usually less $10k/investor.
  • Enforcement
  • Disgorgement over $480M, prejudgment interest $18M, civil penalties of $35M.

Regulators NYAG; SEC
Entity Types B/D; Bank; Corp; Exch; FCM; HF; IA; Inv Co; OTC
Reference NYAG: PR, 9/13/2021; NYAG: LR, 21-062, 9/13/2021; SEC: PR 2021-175, 9/13/2021; SEC: LR 33-10979, 3-20537, 9/13/2021; Citation: 15 USC 77e; NY GBL 359-(e);
Functions Advertising; Compliance; Financial; Legal; Registration/Licensing; Trade Reporting; Trading
Countries China; Hong Kong; United States of America; Cross-Border
Products Banking; Corporate; Cryptocurrency; Equity; Fund Mgt; Futures; Hedge Funds; Issuance/IPO; Securities; Structured Products
Regions Am
Rule Type Enforcement
Rule Date 9/13/2021
Effective Date 9/13/2021
Rule Id 115698
Linked to N/A
Reg. Last Update 9/13/2021
Report Section AML & Enforcement

Last substantive update on 09/13/2021