Dragonchain founder and related entities face accusations from the US Securities and Exchange Commission that they violated federal anti-fraud regulations for their role in raising $16.5 million in securities offerings of unregistered crypto assets, the regulator announced.
In a lawsuit filed in the Western District of Washington, the SEC accuses the defendants of violating Sections 5(a) and (c) of the Securities Act of 1933. The SEC claims that Dragonchain and its founder, John Joseph Roets, illegally raised more than $16 million in ‘proceeds through unregistered offerings and sales of securities to approximately 5,000 investors in the United States and abroad,’ and are responsible for various aspects of the alleged scheme, which occurred in 2017.
“Dragonchain used this revenue to try to develop a type of blockchain technology,” the complaint said.
Dragonchain traded illegal content to solicit funds
The SEC also claims that Dragonchain’s marketing services generated illegal content and stated that its token would increase adoption as the technology grew and its staff and agents publicly discussed DRGN’s investment value, pricing and “listing” on trading platforms, among other things.
“Between 2019 and 2022, Roets, Dragonchain, the Foundation, and TDC allegedly offered and sold approximately $2.5 million worth of DRGN to cover business expenses to further develop and commercialize Dragonchain technology, some of which occurred after of a state regulator discovering that the DRGNs were securities. the SEC said in a statement.
SEC wants to block Dragochain trading
The SEC is also seeking a permanent injunction and return of ill-gotten gains resulting from the alleged scheme by Dragonchain Inc., the Dragonchain Foundation, and the Dragon Company.
“The SEC is seeking permanent injunctions, restitution with pretrial interest, civil penalties, and conduct-based injunctions against each defendant.” He indicated the complaint.
The SEC has sued other companies for unregistered securities
The SEC has been cracking down on crypto companies between 2011 and 2015, more companies were caught for filing incomplete suspicious activity reports that prevented authorities from investigating potential misconduct.
In the past, the SEC has sued companies in various US courts and recently launched an investigation into cryptocurrency exchange giant Coinbase.
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