U.S SEC Files Lawsuit Against Dragonchain

The United States Securities and Exchange Commission (SEC) has filed a lawsuit against the 2017 initial coin offering (ICO) of Dragonchain.

All business entities related to or linked to the ICO and its founder John Joseph Roets were indicted via the lawsuit. Their involvement is because of the presale and ICO which created a return of about $16.5 million in what is now regarded as unregistered crypto assets.

To enumerate, an ICO is a procedure used by upcoming crypto firms to raise funds before an initial launch. As an illustration, the firm develops a token or a digital currency, then indulges the public to purchase them before it goes starts trading them on exchanges.

The three companies including Dragonchain Inc., Dragonchain Foundation, and the Dragon Company under the control of John Joseph were also charged. The U.S. SEC declared that about five years ago, the Dragonchain, Roets, and the Foundation all collaborated to conduct an unregistered offering of the firm’s native token, Dragon Tokens (DRGN).

The offering had taken place in two distinctly differentiated phases. First, was the discounted ‘presale’ phase which took place in August 2017. Precisely, the discounted presale was conducted for members of a crypto investment firm whose name was not disclosed to the SEC. 

Closely following, was an initial coin offering which happened between October and November of the same year. This time around, it was offered to majorly crypto investors. Over 5000 investors globally were involved and a total of $14 million was secured at that time.

Dragonchain Unregulated ICO Sales

Based on the complaints made by the SEC, Dragonchain advertised and promoted the ICO to crypto investors while discussing the token’s investment value, pricing, and listing on trading platforms. 

Furthermore, additional tokens were sold between 2019 and 2022 at $2.5 million. This sale is aimed at offsetting business expenses incurred from the advancement of the Dragonchain technology.

It was right after these 2019-2022 sales that it was discovered that DRGN was indeed securities. With the case filed, the SEC wants “permanent injunctions, disgorgement with prejudgment interest, civil penalties against and conduct-based injunctions” against each Dragonchain and every entity linked with the ICO. 

Meanwhile, the U.S SEC is bolstering its effort toward pulling out bad actors in the crypto ecosystem. Just like Dragonchain, the regulator has also charged the founders of Forsage, in a sweeping enforcement action earlier this week.