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Operation Crypto-Sweep: Ethereum Token ShipChain Ordered Cease and Desist

The South Carolina Attorney General’s Office has just hit the blockchain startup ShipChain, with a cease-and-desist order.

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The South Carolina Attorney General’s Office has just hit the blockchain startup ShipChain, with a cease-and-desist order. ShipChain is a freight logistics platform built on the Ethereum blockchain. The securities commissioner claims the company violated the state’s securities laws.

The cease-and-desist order reads:

“At no time relevant to the events stated herein was Respondent ShipChain registered with the Division as a broker-dealer, and no exemption from registration has been claimed by Respondent ShipChain.”

ShipChain has been offering “investment opportunities” to residents of South Carolina at live events and online. The startup has 30 days to request a hearing to dispute that its token sales do not qualify as an unregulated securities offering.

The order further states.

“It is in the public interest, for the protection of investors, and consistent with the purposes of the Act that Respondent be ordered to cease and desist from engaging in the above-enumerated practices, which constitute violations of the Act, and pay an appropriate civil penalty for its wrongdoing.”

ShipChain addressed the matter via their company Twitter channel two days ago.

The company has kept business as usual, as there have been many tweets showcasing their technology with no sign of panic.

ShipChain has concluded its ICO and is already trading on exchanges, specifically Gate.io and HitBTC.

Operation “Crypto-Sweep”

ShipChain isn’t the only blockchain startup under the microscope, there are at least 70 companies being investigated throughout the U.S. and Canada in what people are calling “Operation Crypto-Sweep.”  The crackdown is led by members of the North American Securities Administrators Association (NASAA) is aimed at targeting companies misleading investors through initial coin offerings or other “investment schemes.”

William Galvin, the state’s secretary of the Commonwealth, said in a statement:

“Not every ICO or cryptocurrency-related investment is fraudulent, but we urge investors to approach any initial coin offering or cryptocurrency-related investment product with extreme caution,” NASAA’s president, Joseph P. Borg said the task force promised more enforcement actions will be forthcoming and the announcements two days ago were just the “tip of the iceberg.”

Jay Clayton, chairman of the U.S. Securities and Exchange Commission (SEC), released a statement on May 22nd, praising regulators for the North American ICO crackdown. This is just after the SEC launched its own fake ICO website, designed to educate investors on how to avoid ICO scams.

Posted In: ICOs