The hunt for companies that fail to comply with the orders of the US CVM, the SEC, continues with the latest installment on Titan, a fintech that provided automated access to Bitcoin and Ethereum.
Under the company’s proposal, investors would be able to invest in BTC and ETH simultaneously, with “low risk” and quarterly rebalancing. The company also charged strategic advisory fees to clients, which ranged from 0.7% to 0.9% of the amounts.
Furthermore, since cryptocurrency trading was conducted on the Bakkt platform, Titan passed on to clients a fee of 0.15% of each transaction executed.
That draws attention since the beginning of 2023, the strategy has already led to a 22.4% loss for customerseven as Bitcoin has increased in value by 56.52% since January and is now priced at US$25,980.00 per unit.
During the same period, Ethereum was up 37.96%, which is now priced at $1,655.00 per unit. That is, customers who invested in Titan’s strategy have lost money and will now still have to see the company pay a fine to regulators.
SEC fines a $1 million fintech that lied to clients about holding cryptocurrencies
Last Monday (21), the SEC released the result of the lawsuit against Titan Global Capital Management USA LLC. The company is an advisory fintech that is not only active in the cryptocurrency market, but also with traditional products.
The allegations relate to the fact that Titan lied to customers about the custody of cryptocurrencies held by the company, a serious compliance failure according to the regulator.
In addition, some Titan employees traded cryptocurrencies with the company, which the regulator said is a serious failure to adopt specific policies for employees.
Contracts with clients also provided for inappropriate clauses for the hedge market, in addition to the company’s unauthorized use of client signatures.
Between August 2021 and October 2022, fintech disclosed to clients a 2,700% advantage for its Titan Crypto strategy.
“When offering and marketing complex strategies, investment advisers must ensure that disclosures to existing and potential investors are accurate. The Commission has changed the marketing rule to allow the use of hypothetical performance metrics, but only if advisors meet requirements that are reasonably designed to prevent fraud”, says Osman Nawaz of the Department Head of Execution Complex Financial Instruments. “Titan’s announcements and disclosures painted a misleading picture of some of its strategies for investors. This action serves as a warning to all advisors to ensure compliance“.
With the action, the SEC levied more than $1 million on Titan, another crypto market company that has been sanctioned by the regulator in recent months. Of the amount, 850 thousand dollars belongs to the company’s customers.
Source: Live Coins
Barry Siefert is an accomplished journalist and author at The Nation View. He is known for his expertise in the field of cryptocurrency, and has written extensively on the topic. With a background in finance and economics, Barry has a deep understanding of the underlying technology and market forces that drive the crypto industry.
