Publicly available records published by the Securities and Exchange Commission (SEC) on September 11, 2018 indicate that the SEC has filed an enforcement action against California-based hedge fund manager Crypto Asset Management LP in connection to its holdings in digital assets. Fitapelli Kurta is interested in hearing from investors who have complaints regarding Crypto Asset Management.
According to a press release, the SEC stated in an order that Crypto Asset Management “offered a fund that operated as an unregistered investment company while falsely marketing it as the ‘first regulated crypto asset fund in the United States.'” Per that order, Crypto Asset Management, as well as its principal Timothy Enneking, completed a raise of more than $3.6 million in 2017 while making false claims that the fund was under SEC regulation and that Crypto Asset Management had filed a registration statement with the SEC. However, according to the SEC, Crypto Asset Management participated in an unregistered public offering (which was not subject to any exemptions from registration) and invested “more than 40% of the fund’s assets in digital asset securities,” ultimately resulting in the fund’s operation “as an unregistered investment company.” Crypto Asset Management ended its public offering upon contact by the SEC about these matters and “offered buy backs to affected investors.”
More specifically, the fund in question was called Crypto Asset Fund, LLC, which had a net asset value of about $37 million as of December 31, 2017, according to the SEC’s order. Crypto Asset Fund was Mr. Enneking’s first fund based in the United States, and it raised more than $3.6 million from 44 investors between August 1, 2017 and December 1, 2017, according to the SEC, which states that most were individual investors. Crypto Asset Management allegedly “engaged in a general solicitation of public interest” in the public offering via its website, social media, and media interviews, and it “did not file or cause to be filed a registration statement with the Commission,” according to the SEC’s order. In connection with these and other activities, the SEC found that Crypto Asset Management engaged in willful violations of the Securities Act, the Investment Company Act, and the Advisers Act.
In connection with this enforcement action, Crypto Asset Management and its principal Timothy Enneking agreed to a censure and a cease-and-desist order, though they neither admitted nor denied the findings. They have also agreed to a penalty of $200,000. SEC Co-Chief of the Asset Management Unit C. Dabney O’Riordan said in a statement: “Hedge funds seeking to ride the digital asset wave continue to proliferate. Investment advisers must be sure that the funds they offer adhere to the applicable registration obligations and must accurately represent their funds’ regulatory status to investors.”
If you or someone you know has a complaint regarding Crypto Asset Management or Crypto Asset Fund, call Fitapelli Kurta at 877-238-4175 for a free consultation. You may be eligible to recoup lost funds. Fitapelli Kurta accepts every case on contingency: we only get paid if and when you collect money. Time to file your claim may be limited, so we recommend you avoid delay. Call 877-238-4175 now to speak to an attorney for free.