Dragonchain Charged with Unregistered Crypto Asset Securities Offerings

The Securities and Exchange Commission (SEC) has charged Dragonchain, Dragonchain Foundation, the Dragon Company and founder John Joseph Roets with raising $16.5 million in an “unregistered crypto asset securities offering.”

In the complaint, the SEC alleges that Roets, Dragonchain, and the Foundation conducted an unregistered offering of Dragon tokens (DRGN) in two phases: (1) a discounted “presale” in August 2017 to members of a crypto investment club, and (2) an initial coin offering (ICO) in October and November 2017 marketed predominately to crypto investors. The SEC claims that around $14 million was raised in the ICO from approximately 5000 investors including individuals in the US.

Allegedly between 2019 and 2022 the defendants sold around $2.5 million more in Dragon Tokens.

The complaint adds that Dragonchain distributed the Dragon Tokens without registering the offering.

Of note, in the SEC’s complaint, it is stated that under Howey, Congress defined a “security to embody a flexible rather than static principle, one that is capable of adaption…”

Roets has previously responded to the inquiry by the SEC with a letter posted this past May.

Dragonchain was originally a project developed by the Disney Company and then released as open sourced code.

The SEC’s complaint has been filed in the U.S. District Court for the Western District of Washington and charges the defendants with violating the Securities Act of 1933. The SEC is seeking permanent injunctions, disgorgement with prejudgment interest, civil penalties against and conduct-based injunctions against each defendant.



Sponsored Links by DQ Promote

 

 

Send this to a friend