Coinme Fined $4 Million by SEC

The US Securities and Exchange Commission (SEC) has fined Coinme, a cryptocurrency exchange, nearly $4 million for allegedly offering unregistered securities and making “misleading statements” about its crypto token, UpToken. Coinme, its subsidiary Up Global SEZC, and its CEO, Neil Bergquist, were charged by the SEC on April 28, with Up Global agreeing to pay a $3.52 million penalty, for which Coinme was also held liable. The SEC alleged that Coinme’s Initial Coin Offering (ICO) of UpToken between October and December 2017 was an investment contract under the Howey test and was an unregistered securities offering. The ICO raised around $3.6 million to expand Coinme’s fleet of Bitcoin ATMs, with the funds used to add 30 ATMs, and UP holders received benefits such as discounted fees and cashback when using the ATMs. However, in January 2019, Coinme changed its offering and partnered with Coinstar to use its cash-counting kiosks to facilitate cash-to-crypto transactions instead of its own ATMs. Coinme shut down all of its ATMs by July 2019, and there is currently no use for UpToken, with its market cap falling to around $50,000 and 24-hour trading volumes topping just over $180.

Coinme was found to have offered unregistered securities, and the SEC handed down fines totalling almost $4 million to the company, its subsidiary Up Global SEZC, and the CEO of both firms, Neil Bergquist. The SEC found that Coinme’s ICO of UpToken between October and December 2017 was an unregistered securities offering, and the ICO was considered an investment contract under the Howey test. Coinme raised approximately $3.6 million through the ICO to expand its fleet of Bitcoin ATMs, adding 30 ATMs with ICO funding. UP holders received discounted fees and 1% cashback in UP when using the ATMs. However, in January 2019, Coinme changed its offering, partnering with Coinstar to use its cash-counting kiosks for cash-to-crypto transactions instead of its own ATMs. Coinme shut down all of its ATMs by July 2019, rendering UpToken unusable. The SEC also found that Bergquist and Up Global made false and misleading statements about the demand for UpToken and the amount raised in the ICO.

The SEC’s action against Coinme underscores the agency’s increased scrutiny of the cryptocurrency market, particularly with regard to ICOs and the sale of unregistered securities. The SEC has warned repeatedly that ICOs are subject to federal securities laws, and that any token offered or sold in an ICO must be registered or qualify for an exemption from registration. Failure to comply with these laws can result in enforcement action, as demonstrated in the case of Coinme.

Coinme’s ICO of UpToken highlights the risks associated with investing in ICOs, particularly those that are not registered with the SEC. Investors should conduct thorough due diligence and carefully review the offering materials before investing in any ICO. The case also highlights the importance of transparency and accurate disclosure in the cryptocurrency market, with companies facing enforcement action if they make false or misleading statements.


Tagged : / / / / /

Coinme Introduces 6 Additional Crypto Instant Trading by Cash

Coinme, a major cryptocurrency cash exchange based in Seattle and Washington, announced on Wednesday that it has introduced six additional cryptocurrencies to its list of buyable assets from its 10,000 grocery store kiosks across the United States.  

Ether (ETH), polygon (MATIC), Chainlink (LINK), dogecoin (DOGE), Litecoin (LTC), and stellar (XLM) are now available for instant purchases using cash at Coinme-enabled kiosks countrywide.

Crypto kiosks like the Coinme-enabled machines allow users to buy cryptocurrency in person at one of these machines in more than 10,000 locations.

With the integration of the six additional cryptocurrencies, Coinme wants to give users greater freedom to interact with different tokens beyond Bitcoin.

For instance, users who want to buy Ether to purchase a non-fungible token (NFT) or buy Stellar (XLM) cryptocurrency to send across borders can do so at one of the supermarket kiosks.

Neil Bergquist, CEO and co-founder of Coinme, further elaborated: “Different coins serve different purposes, and we’re excited to continue serving our customers with a menu of coins representing approximately 70% of the total crypto market cap. Our partnership with Coinstar has allowed us to scale to 10,000 additional physical locations, providing instant cash onramps to crypto, which can be purchased and securely stored in the Coinme wallet or sent to nearly any wallet globally.”

Founded in 2014, Coinme has continued to function as a trusted gateway to digital currencies and a better financial future.

In May last year, Coinme partnered with MoneyGram to enable thousands of physical locations in 49 states in the U.S. to facilitate the purchase and sale of crypto using cash.

The move marked another step from a mainstream financial institution (MoneyGram) toward the acceptance of nascent digital currencies.

Financial services firms have been increasingly making moves in the crypto landscape.

In October 2020, PayPal started allowing its users to trade cryptocurrencies. In March last year, PayPal gave its users the option to pay with cryptocurrency at millions of online retailers.

In February last year, Mastercard started offering customers cards that allow consumers to transact using their cryptocurrencies.

Image source: Shutterstock


Tagged : / / / /

Moneygram buys 4% stake in crypto ATM operator Coinme

Money transmission network MoneyGram now has a minority investment in crypto ATM operator Coinme following a Series A funding round.

In a Wednesday announcement, MoneyGram said it had purchased a roughly 4% ownership stake in Coinme — likely more than $764,000, given its valuation of $19.1 million in June — as part of a strategic investment in the crypto company. The investment follows a May 2021 partnership between the two firms aimed at expanding access to crypto-fiat exchanges.

“We continue to be bullish on the vast opportunities that exist in the ever-growing world of cryptocurrency and our ability to operate as a compliant bridge to connect digital assets to local fiat currency,” said MoneyGram CEO Alex Holmes. “Our investment in Coinme further strengthens our partnership and compliments our shared vision to expand access to digital assets and cryptocurrencies.”

Currently, U.S.-based MoneyGram users are able to exchange their Bitcoin (BTC) and crypto holdings for cash at point-of-sale outlets. Coinme’s website reports more than 23,000 ATM locations in the United States, including MoneyGram and Coinstar.

While MoneyGram seemingly winds up its partnership with Coinme — currently only operating in the United States — it scaled back its collaboration with blockchain-based payments firm Ripple Labs in 2021. The two firms inked a strategic partnership agreement in 2019, processing billions of dollars through Ripple’s RippleNet and On-Demand Liquidity services. However, MoneyGram suspended the partnership in February 2021 following the U.S. Securities and Exchange Commission filing a complaint against Ripple, alleging securities violations.

Related: MoneyGram launches USDC settlement using the Stellar blockchain

At the time of publication, shares of MoneyGram stock (MGI) are trading for $7.55, having fallen roughly 2.5% in the last 24 hours.