The American CryptoFed DAO seems to have caught itself in a nasty net and risks losing its registration. The US Securities and Exchange Commission has found some anomalies in the company’s Form S-1 registration statement dated September 17, 2021.
The firm had been recognized as a legal entity in July 2021 by the Wyoming Secretary of State’s office. But on November 18, 2022, the SEC initiated proceedings against the American CryptoFed DAO to determine the issuance of a stop order. This would retract the firm’s registration and bar sales of in-house tokens – Ducat and Locke.
The Form S-1 registration statement filed by American CryptoFed DAO, as per SEC’s Division of Enforcement, lacks vital information such as audited financial statements and details about its business and management. The watchdog believes the firm’s filing contains misleading statements and omissions while being inconsistent in describing the tokens as securities.
David Hirsch, Chief of the Crypto Assets and Cyber Unit, said the American CryptoFed DAO failed to comply with the disclosure requirements of the federal securities laws. The firm claimed that the securities transactions it wants to register are not securities transactions at all. Hirsch said the issuers must provide the required disclosure information to the SEC. Moreover, the agency said American CryptoFed DAO failed to cooperate during the examination of its registration statement. As such, the SEC wants to stop the firm’s registration to protect investors against misleading information.
Xiaomeng Zhou, American CryptoFed COO and organizer, defended the firm saying that the subject matter pertaining to the effectiveness of the registration statement includes a “delaying amendment”. He said their Form S-1 is a subject matter of Section (a) and Section 8(b) of the Securities Act of 1933. Zhou outlined that it allows the SEC to issue a Refusal Order to provide further clear guidance for American CryptoFed DAO to complete the Form S-1 registration (not Stop Order).
