SEC Sues Chicago Crypto Over Alleged Illegal Securities Sales

Chicago Crypto Capital violated various securities laws by illegally selling unregistered securities to unsophisticated buyers between August 2018 and November 2019, the SEC says in a new lawsuit.

The US Securities and Exchange Commission alleges in a complaint filed in the US District Court for the Northern District of Illinois that CCC, company president Brian Amoah, and two salespeople raised $1.5 million through the illegal offers and sales.

The BXY crypto asset securities didn’t qualify for any exemption from the SEC’s registration requirement, and none of the defendants were registered securities brokers, the agency alleges.

Additionally, the individual defendants misstated information a reasonable investor would have wanted to know, such as the custody and delivery of BXY, the markup charged by CCC, the delivery of account statements, CCC’s liquidation of an investor’s BXY, and their personal investments in the securities, the SEC says.

The defendants also failed to tell investors about financial and management problems at BXY’s issuer, Beaxy Digital Ltd., in late 2019, Wednesday’s complaint says.

Causes of Action: Securities Act of 1933, Securities Exchange Act of 1934, and Rule 10b-5.

Relief: Bar future violations of the securities laws and participation in future offerings of crypto asset securities, disgorgement of gains, prejudgment interest, and statutory civil penalties against all defendants. Entry of an officer and director bar against Amoah.

Response: CCC didn’t immediately respond to Bloomberg Law’s request for comment.

Attorneys: The SEC’s Chicago Regional Office represents the agency.

The case is SEC v. Chicago Crypto Capital LLC, N.D. Ill., No. 22-cv-2975, complaint filed 9/14/22.