Cryptocurrency startup Thor Technologies and its founder, David Chin, have been ordered to pay more than $900,000 as part of a settlement with the U.S. Securities and Exchange Commission (SEC) over alleged illegal token sales.
A federal court in San Francisco issued a default judgement against Chin and Thor on Wednesday after they failed to respond to an SEC complaint filed in December 2022.
According to the complaint, Thor raised around $2.6 million from approximately 1,600 investors in 2018 through sales of its “Thor Token” without proper SEC registration or exemptions. The funds were supposed to be used for creating a software platform for the gig economy.
The sale targeted U.S. and foreign investors. The SEC alleges Chin and Thor violated securities laws by falsely promoting the tokens as investment opportunities and making misleading claims about the project’s progress to drive sales.
In 2019, Chin informed investors Thor was halting operations due to regulatory hurdles but assured them of repayments. However, the SEC claims that Chin redirected some of the funds to his personal bank account and didn’t reimburse the investors.
As part of the default judgement, Chin and Thor are required to jointly pay over $903,000 in disgorgement of improper gains and prejudgment interest. Furthermore, they are permanently prohibited from selling crypto securities in the future, although Chin can still trade securities for his personal use.
This is not the first instance of the SEC’s success in enforcement. In January, NEXO settled for $45 million with the U.S. SEC and NASAA regarding their financial products after an investigation into their alleged sale of securities in the preceding year.
Also in January, Coinbase agreed to a $100 million settlement with New York regulatory authorities. In the same month, Coinbase also agreed to a $100 million settlement with regulatory authorities in New York. At the time, the Department of Financial Services (DFS) found substantial and persistent failures in Coinbase, including its anti-money laundering program and know-your-customer procedures, among other issues.
Similarly, in February, Binance was preparing for a settlement with the U.S. regulators over ongoing regulatory and law enforcement investigations. Binance has been under scrutiny since 2018 for potential violations of American anti-money laundering laws and criminal sanctions.
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