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ShipChain Blockchain Firm Slapped with Cease-and-Desist Order in South Carolina

ShipChain Blockchain Firm Slapped with Cease-and-Desist Order in South Carolina

Reading Time: 2 minutes by on May 25, 2018 Altcoins, Blockchain, Business, Ethereum, Finance, News, Regulation
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Regulatory authorities in the United States are not relenting in their efforts to sanitize the cryptocurrency ecosystem. In one such operation, the South Carolina Attorney General’s office has issued a cease-and-desist order to ShipChain for running afoul of its statutes by selling unregistered securities.

Operation Securities Sweep

Per the notice issued by the office of the Attorney General, ShipChain has violated the laws of the land by offering cryptocurrency-related investments to South Carolina residents through its agents. These offerings were facilitated by the unregistered ShipCoin token which is the primary medium of exchange on the platform.

The authorities also accused ShipChain of carrying out investment campaigns on its website and in person without making efforts to register with the authority as a broker dealer. An excerpt from the order read:

“At all times relevant to this order, Respondent ShipChain continuously offered investment opportunities in the ShipChain platform and the corresponding tokens to South Carolina residents. At no time relevant to the events stated herein were the securities at issue registered with the Division or federal covered securities, and no exemption from registration has been claimed by the Respondents.”

According to the order, ShipChain has been operating from Delaware, and the platform itself is built on Ethereum. The firm claims to offer freight services to clients and users are allowed to pay with ShipCoin tokens. Following the notice from South Carolina authorities, the ShipCoin project has been barred from operating in the region until further notice.

The ShipChain team has been given 30 days to request a hearing. ShipChain has also taken to Twitter, assuring its investors that their lawyers are on top of the matter and everything will be settled shortly.

ShipChain Responds

“We are aware of the letter that was sent to us by the Attorney General of South Carolina. Rest assured that our lawyers are working on corresponding as fast as they can. We will keep you updated as soon as we have more information,” ShipChain tweeted.

On May 24, ShipChain released a statement that it was unaware of the token sales in South Caroline and maintained that its token are not securities:

“SHIPs are blockchain tokens that are one means of enabling transactions on ShipChain’s award-winning, innovative logistics platform. ShipChain does not believe that the tokens are securities. In addition, if the Commissioner’s investigation, referred to in the order, had ever contacted ShipChain, ShipChain would have shown that its private sale of tokens was conducted in a manner consistent with applicable securities laws requirements.”

ShipCoin Sinking

The bad news is already taking its toll on the price of the ShipCoin token as Luke Martin an ICO analyst and founder of @VentureCoinist tweeted that the altcoin had already lost up to 40 percent since the order.

According to another press release dated May 21, 2018, the North American Securities Administrators Association (NASAA) has joined forces with U.S. and Canadian authorities to crackdown on fraudulent Initial Coin Offerings (ICOs), cryptocurrency-related investment products, and those behind them.

Of a truth, not all ICO projects are scams. As such, it is important for organizers of credible crypto-related businesses to always be proactive in ensuring they are on the right side of the law at all times or, better still, move to more crypto-friendly regions altogether.

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