Fintech investment adviser Titan Global Capital Management USA LLC has agreed to pay over $1 million to settle charges from the United States Securities and Exchange Commission (SEC) that it misled investors about performance metrics and custody of clients’ cryptocurrency assets.
SEC Targets Another Crypto Firm
According to an August 21 press release, the American regulatory watchdog announced the charges against Titan for allegedly flouting advertising and compliance regulations and failing to provide accurate disclosures surrounding their clients’ digital assets.
The announcement stated the New York-based registered investment adviser, misled investors with statements made on its website about hypothetical returns from August 2021 to October 2022. The recent charges included touting annualized crypto performance results as high as 2,700% without telling investors they were extrapolated from a “purely” hypothetical three-week period during which no trading occurred.
The SEC also found Titan made conflicting statements to clients about how it handled custody for crypto assets and failed to adopt policies for employees’ personal trading in crypto assets. The SEC document read,
“For a period ranging from August 2021 to October 2022, Titan, which offers multiple complex strategies to retail investors through its mobile trading app, made misleading statements on its website regarding hypothetical performance, including by advertising “annualized” performance results as high as 2,700 percent for its Titan Crypto strategy.”
In response to the charges, Titan Global Capital Management has reportedly accepted a “cease-and-desist” directive, agreed to an official censure, and is set to pay a sum surpassing $1 million. This amount comprises an $850,000 civil fine and an added sum surpassing $190,000, intended to cover prejudgment interest.
Cryptocurrency War Intensifies
Over the past couple of months, the SEC has continued to launch a full-scale war, targeting digital asset firms and cryptocurrencies, including leading players such as Binance and Coinbase. It charged Binance for allegedly selling unregistered securities and violating the Securities Act of 1933 by offering digital assets that are considered investment contracts under the Howey test.
Meanwhile, the SEC accused Coinbase of operating as an unregistered securities platform and brokerage service. The regulator alleged that Coinbase made billions acting as the middleman for cryptocurrency buyers and sellers but did not give investors lawful protections while acting as a broker.
Not only this, the American agency also classified several cryptocurrencies as securities. In its recent case against Binance, the SEC introduced 10 cryptocurrencies into the securities classification such as BNB, SOL, MATIC, ADA, SAND and MANA among others.
On the other hand, in its Coinbase suit the SEC named 13 cryptocurrencies which doubled down on the newly classified SOL, ADA, MATIC, SAND and AXS and added six more including Chiliz (CHZ), Flow (FLOW), Internet Computer (ICP), NEAR, Voyager Token (VGX) and NEXO.
The brutal crackdown on digital assets that gained momentum following the collapse of Sam Bankman-Fried’s FTX Empire has been intensifying with each passing day. In recent testimony before the U.S. Senate Appropriations Committee’s Subcommittee on Financial Services and General Government, SEC Chair Gary Gensler requested additional funds for the SEC that would increase its overall budget to $1.4 billion, to address the non-compliance issues prevailing in crypto markets.
unnecessary provocations should stop
It is not just the SEC, but other financial regulatory bodies such as the Commodity Futures Trading Commission (CFTC) have also doubled down efforts to weaken the fledgling cryptocurrency industry. The regulatory authorities have relied on opaque and discretionary enforcement actions, charging companies for not complying with the law without clearly stating what the law is.
On August 20, former SEC official John Reed Stark, even, went to the extent of criticizing blockchain technology, which powers Web3, cryptocurrencies, and decentralized finance (DeFi) platforms. He claimed this technology has enabled criminals to operate in a regulatory gray area, facilitating crimes that were not possible before.
We at Crypto-Economy believe the SEC and other anti-crypto vigilantes must stop this illegal war on crypto. Instead, they should strive to provide a clear, legal path for the crypto landscape to operate in order to protect American investors, the U.S. economy along with the global economy.