The Securities and Exchange Commission suspended trading in American Retail Group Inc. on Monday for questions arising from its claims about SEC-endorsed cryptocurrency transactions.
The Nevada-based company, also known as Simex Inc., said it had partnered with an SEC-qualified custodian and that these digital currency transactions would be done under SEC regulations, according to the agency. The company also claimed that it was conducting an SEC-registered token offering.
The SEC can suspend trading in a stock for 10 days under securities law and generally prohibit a broker-dealer from soliciting investors to buy or sell the stock if it is not in compliance.
The agency has been on the alert for such claims of SEC endorsements and wants investors to be, as well.
The SEC issued an investor alert on Oct. 11 to warn investors to be on the lookout for false claims about agency endorsements related to digital assets.
The SEC’s Office of Investor Education and Advocacy was joined by the Commodity Futures Trading Commission’s in the warning about fraudsters’ use of false claims to legitimize their offerings of cryptocurrencies, coins and tokens such as those offered in so-called initial coin offerings.
“The SEC does not endorse or qualify custodians for cryptocurrency, and investors should use vigilance when considering an investment in an initial coin offering,” stated Robert Cohen, chief of the SEC Enforcement Division’s cyber unit, in a statement.
The SEC also acknowledged the assistance of the Financial Industry Regulatory Authority.
Simex did not immediately return an email query for comment.
The SEC does not comment publicly on a company when the 10-day suspension period ends because the company could still have “serious legal problems,” the SEC has stated in the previous investor-warning release. The public would not know if the SEC is continuing an investigation unless and until it publicly announces an enforcement action, it stated.