The U.S. Securities and Exchange Commission (SEC) has revoked the registration of ParagonCoin’s securities over alleged infringements on capital market rules.
ParagonCoin, a digital currency firm focused on the marijuana industry, came under fire by the SEC for failing to comply with periodic filing requirements. According to the SEC’s disclosure, ParagonCoin violated section 13 (a) of the Securities Exchange Act of 193 and Exchange Act Rules 13a-1.
Before deciding to cancel the registration of the company’s securities, the SEC issued an order instituting proceedings (OIP) against the firm in 2022 to seek an explanation for the lack of periodic filings. The securities rules place a burden on security issuers to provide the SEC with “current and accurate information in periodic reports.”
“Respondent again failed to respond to an order to show cause why it should not be found in default. We now find the Respondent to be in default, deem the allegations of the OIP to be true, and revoke the registrations of its securities,” the SEC’s statement read.
The SEC confirmed that multiple factors influenced the severity of the penalty meted against ParagonCoin, including the recurrent nature of the violations, which it describes as showing a “high degree of culpability.” Another factor considered by the securities watchdog was the failure to respond to the OIP, a decision that shows that the firm has not given assurances to remedy the violations.
“An issuer’s failure to file periodic reports violates “a central provision of the Exchange Act…, depriv[ing] both existing and prospective holders of its registered stock of the ability to make informed investment decisions based on current and reliable information,” the SEC said.
Not the first rodeo with the law
ParagonCoin, backed by American rapper Jayceon Terrel Taylor aka “The Game,” has had multiple run-ins with the law after the investors filed a class action lawsuit against the firm. The investors claim that the digital asset firm violated securities laws in its initial coin offering (ICO), which raised well over $60 million.
Apart from the class-action lawsuit, ParagonCoin became one of the first ICO issuers to be slammed with civil penalties for failing to seek registration with the SEC in 2018. At that time, ParagonCoin entered a settlement with the Commission with a pledge to pay a $250,000 penalty, register their tokens as securities, and file regular reports with the SEC.
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