SEC Takes Emergency Action Against High Street Capital ICO
The US regulator charges Pennsylvania-based ICO issuers with violating the antifraud provisions of federal securities laws
What Happened?
June 19, 2020: The Securities and Exchange Commission obtained a temporary restraining order and asset freeze against the companies Hvizdzak Capital Management, LLC, High Street Capital, LLC, and High Street Capital Partners, LLC. Brothers Sean Hvizdzak and Shane Hvizdzak offered securities in a private fund and allegedly misrepresented fund performance, fabricated financial statements, and forged audit documents.
Source: https://www.sec.gov/news/press-release/2020-137
Who Is Impacted?
Current investors and advisors of the project; companies that have conducted a non-compliant token offering.
Why This Matters?
While the Hvizdzak brothers clearly had fraudulent intentions, the current precedent shows that any company making misleading statements in its investor communications–even if by mistake–would be treated by the U.S. regulators in the same way.
While fraudulent schemes are not uncommon in the traditional securities world, the percentage of issuers conducting offering fraud and the misappropriation of investor proceeds is significantly higher in the ICO world–and thus attracts a lot of attention from regulators.
To avoid similar action, companies operating in the digital securities space should make sure that their investor communications are compliant.
What’s Next?
In addition to an asset freeze and a temporary restraining order, the court ordered an accounting audit, expedited discovery, and an order prohibiting the destruction of the entities’ documents. A hearing is scheduled for June 30, 2020, in order to consider continuing the asset freeze and the issuance of a preliminary injunction for a longer period.
learn more
Is your AML compliance too expensive, time-consuming, or ineffective?
iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.
Request a demo today.
Centralized Digital Identity and ID “Phone Home” Privacy Alarms
As digital ID systems expand globally, centralised platforms like One Login and Aadhaar raise major concerns about privacy, data security, and surveillance. This article explores the risks of identity systems that phone home and how iComply’s decentralised identity verification solution offers a more secure and compliant path forward.
How to Do a KYC Refresh the Right Way
KYC refresh is a critical part of ongoing due diligence. This guide explains how to build an efficient, risk-based KYC refresh strategy using identity verification tools to improve compliance, customer experience, and operational performance.
Accelerating Ultimate Beneficial Ownership Discovery with KYB Compliance Software
Beneficial ownership discovery doesn’t need to be slow or manual. This article explores how firms can use advanced KYB software to comply with UBO requirements from AUSTRAC, FCA, FinCEN, and the EU AMLA – while improving customer satisfaction and operational efficiency.
