SEC Takes Action Against Dragonchain Over 2017 ICO: A Deep Dive

SEC’s Complaint: What’s at Stake?

The United States Securities and Exchange Commission (SEC) has decided to shake things up by filing a complaint against Dragonchain and its key players. This isn’t just a casual chat over coffee; we’re talking about a legal action sparked by a 2017 Initial Coin Offering (ICO) that raised a whopping $16.5 million.

The Players Involved

The SEC has charged not just Dragonchain, but also the Dragonchain Foundation, the Dragon Company, and their founder John Joseph Roets. Allegedly, they pulled off an unregistered offering of their beloved DRGN tokens in a presale back in August 2017, totaling around $14 million. To add a sprinkle of the absurd, they also sold another $2.5 million worth of DRGNs post-ICO to cover their business expenses between 2019 and 2022. Sounds like a plot twist from a low-budget crypto drama, doesn’t it?

SEC’s Previous Warnings

Before Dragonchain’s exciting (yet questionable) offering, the SEC released a report back in July 2017 advising all crypto enthusiasts to register with them. Spoiler alert: they hinted that many ICOs would likely be classified as securities offerings. Yet, Dragonchain decided to keep dancing to the rhythm of non-compliance. Now, the SEC is looking to deliver some serious consequences, including permanent injunctions and civil penalties against these parties.

Roets Responds: A Crypto Crusader’s Rant

In a letter that made waves on Dragonchain’s Twitter, Roets expressed his irritation with the SEC’s approach, describing it as outdated. “The SEC is picking and choosing projects to target,” he lamented, likening the Commission’s methods to trying to force-fit a square peg into a round hole, thanks to their 1930s securities law. This isn’t just a personal beef; Roets raises a valid point about how regulators appear to struggle with understanding the ever-evolving tech world.

The Legacy of Dragonchain

Dragonchain has its origins in the creative halls of the Walt Disney Company, where it began development in 2014. Released publicly in 2016, it was later handed over to the Dragonchain Foundation for management. Despite its interesting backstory, it has largely avoided the mainstream crypto spotlight lately, perhaps overshadowed by the next shiny project. But, with the SEC breathing down their necks, it seems the spotlight is back on.

A Brief SEC History Lesson

The SEC has been no stranger to the world of cryptocurrency, initiating their first enforcement against a crypto firm way back in July 2013. This has paved the way for a slew of investigations surrounding ICOs in the years that followed, proving the agency’s keen interest—or perhaps a fixation—in regulating the crypto space. In fact, over half of the SEC’s actions in 2021 were tied to ICOs, showing that they certainly aren’t throwing in the towel any time soon.