SEC Suit Againts Dragonchain In Relation to its ICO
The SEC Has Filed Charges Against Dragonchain Regarding Its ICO That Raised 16.5 Million DRGN
It is alleged that John Joseph Roets, along with his companies Dragonchain, the Dragonchain Foundation, and the Dragon Company, illegally solicited investors for a total of $16.5 million through the sale of crypto asset securities.
SEC contends that Roets and the businesses sold about $2.5 million of DRGNs between 2019 and 2022 to develop and sell Dragonchain technology.
The initial coin offering (ICO) and the 2017 presale of DRGN are alleged to have been unregistered offerings of crypto asset securities by the SEC, which resulted in a total of more than 5,000 investors contributing $14 million.
Recently, the United States Securities and Exchange Commission (SEC) has raised the amount of scrutiny and watchfulness it exercises over cryptocurrency initiatives. The SEC said on August 16 that it would be filing charges against John Joseph Roets and the companies he runs, including Dragonchain, the Dragonchain Foundation, and The Dragon Company, for allegedly soliciting $16.5 million through unregistered “crypto asset” securities offerings.
According to the SEC, in 2017, John Roets and his three entities conducted an unregistered offering of Dragon tokens. This offering took place through a discounted “presale” in August 2017 to members of a crypto investment club and through an initial coin offering (“ICO”) in October and November 2017 that was marketed predominately to crypto investors. Both of these events took place in 2017.
In addition, the SEC claims that Dragonchain broke the Securities Act when it solicited funds from around 5,000 investors all over the world to the tune of nearly $14 million. The governing body explains further that the DRGN token was promoted to cryptocurrency investors by highlighting the investment worth of the token, as well as its pricing and “listing” on trading platforms.
Following this, the SEC states that between 2019 and 2022, Roets and the organizations supposedly offered and sold roughly $2.5 million worth of DRGNs to develop and market Dragonchain technology. The SEC is now demanding that Roets and the entities disgorge the proceeds of these sales along with gleeful anticipation and a monetary penalty.
The response given by Dragonchain’s Roets to the court filing:
People, this was a joke (good one btw @LBRYcom) 😉
Dragonchain was operational inside a Fortune 500 company before it was open sourced in 2016 and for a full year before the DRGN tokenized micro-license was even created.#DivideAndConquer@eternalize_this
— J O E D R A G O N 🇺🇸 (@j0j0r0) August 16, 2022
The SEC has been investigating Dragonchain for several years, and during that time, it has repeatedly requested testimony from company leaders and workers. Since 2018, the Securities and Exchange Commission has been looking into Dragonchain, and in May of this year, the company published a statement in response to the SEC’s request to charge Dragonchain on April 27, 2022.
Roets indicated in his open letter that he was certain he had a “very good case” against the charges brought against him. He asserted that the Securities and Exchange Commission (SEC) attempted to force incompatible software technologies into securities law from the 1930s. His letter states, “We’ve never had the opportunity to argue the argument that the DRGN is a software license and utility token as opposed to a financial asset,” and this is what is written in his letter.
Not the First Time Dragonchains’ Tryst with Authorities
This is not the first time regulatory authorities have been interested in Dragonchain. In a court filing in 2021, the state of Washington called into question the safety of the DRGN token.
According to the filing, Dragonchain “is not currently registered to sell its assets in the state of Washington.” According to the petition, the corporation was given a cease and desist order as well as a fine of fifty thousand dollars.
SEC’s enforcement operations against bogus cryptocurrency schemes have increased recently. The most recent action taken by the SEC regarding Dragonchain The Securities and Exchange Commission (SEC) has followed the lead of the Commodity Futures Trading Commission (CFTC) in asserting in a court filing that nine digital assets listed on the most major cryptocurrency Coinbase are unregistered securities.