SEC Slams Dragonchain With Lawsuit for Selling Unregistered Securities

The U.S. Securities and Exchange Commission (SEC) has filed charges against entities related to Dragonchain along with the founder and controlling person, John Joseph Roets, alleging that the defendants conducted an unregistered cryptocurrency offering.

• The SEC filed the complaint in the U.S. District Court for the Western District of Washington on Tuesday (August 16, 2022).
• According to the American regulator, Roets and his three entities – Dragonchain Inc., Dragonchain Foundation, and the Dragon Company – “illegally raised” $16.5 million through the unregistered offering of DRGN tokens.
• A large portion of the funds – $14 million – was raised from about 5,000 investors globally through an initial coin offering (ICO) in 2017.
• Between 2019 and 2022, the defendants also sold $2.5 million worth of DGRN tokens to develop and promote the Dragonchain technology and take care of business expenses.
• Following the defendants’ alleged violation of federal securities laws, the SEC is seeking “permanent injunctions, disgorgement with prejudgment interest, civil penalties against and conduct-based injunctions against each defendant.”
• The latest development is similar to a lawsuit the SEC filed against Ripple in December 2020. The agency accused the company, CEO Brad Garlinghouse, and co-founder Chris Larsen, of conducting a $1.3 billion unregistered security offering.
• Meanwhile, the defendants have refuted the SEC’s claims, stating that XRP is not a security, while the legal battle between Ripple and the agency is still ongoing.
• Recently, the securities regulator launched a probe on cryptocurrency exchange giant Coinbase. As previously reported by CryptoPotato, the SEC believes that some of the tokens listed on the platform are unregistered securities.