Digital Asset Enforcement Action: SEC Charges Media Companies with Illegal Unregistered Offering of a Digital Asset Security

The Securities and Exchange Commission continues to file charges against firms that have issued digital assets that may be securities.

Today, the SEC has charged New York City-based GTV Media Group Inc. and Saraca Media Group Inc., and Phoenix, Arizona-based Voice of Guo Media Inc, with allegations of illegal securities offerings.

The SEC filed charges against GTV and Saraca for conducting an illegal unregistered offering of a digital asset security referred to as either G-Coins or G-Dollars.

The SEC states that the respondents have agreed to pay more than $539 million to settle the SEC’s action.

According to the SEC, from April through June 2020, the respondents generally solicited thousands of individuals to invest in the GTV stock offering. During the same period, GTV and Saraca solicited individuals to invest in the digital asset offering.

The order finds that the respondents disseminated information about the two offerings to the general public through publicly available videos on GTV’s and Saraca’s websites, as well as on social media platforms such as YouTube and Twitter.

Through these two securities offerings, whose proceeds were said to have been commingled, the respondents collectively raised approximately $487 million from more than 5,000 investors, including U.S. investors. The SEC’s order claims that no registration statements were filed or in effect for either offering, and the respondents’ offers and sales did not qualify for an exemption from registration.

Sanjay Wadhwa, Deputy Director of the SEC’s Enforcement Division, commented:

“Issuers seeking to access the markets through a public securities offering must provide investors with the disclosures required under the federal securities laws. When they fail to do so, the Commission will seek remedies that make harmed investors whole, such as an unwinding of the offering and a return of the funds to the investors.”

Without admitting or denying the SEC’s findings, GTV and Saraca have agreed to a cease-and-desist order, to pay disgorgement of over $434 million-plus prejudgment interest of approximately $16 million on a joint and several basis, and to each pay a civil penalty of $15 million.

Voice of Guo agreed to a cease-and-desist order, to pay disgorgement of more than $52 million along with prejudgment interest of nearly $2 million, and to pay a civil penalty of $5 million.  The order establishes a Fair Fund to return monies to injured investors.

The SEC states that respondents have also agreed to not participate, directly or indirectly, in any offering of a digital asset security, to assist the SEC staff in the administration of a distribution plan, and to publish notice of the SEC’s order on their public websites and social media channels.

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