The US Securities and Exchange Commission (SEC) scored a default judgment against Thor Technologies and its founder David Chin on Wednesday.
The software company was accused of conducting a $2.6million unregistered offering of crypto asset securities, as per court documents.
Default judgements are usually given when the opposing party in question fails to take certain actions. This could range from failing to attend a trial to meeting certain deadlines for filing documents.
On Wednesday, the court considered the SEC’s Complaint, Motion for Default Judgment, along with all other evidence and arguments presented. According to the regulatory watchdog, Thor and Chin offered and sold ‘Thor Tokens’ to fund a business of a software platform for gig economy workers and companies.
In this complaint filed on 21 December 2022, the SEC accused the two entries for unregistered sale and offering of securities, marketing as an investment opportunity. According to the filing, Chin and Thor Technologies raised $2.6m from a diverse group of 1,600 investors between March 2018 and May 2018, where the funds were generated through the sale of its coin.
Later in April 2019, Thor announced shutting down its operations due to “many regulatory challenges”. The news delivered by Chin in a blog post stated that they had run out of the $21m raised in an ICO and had failed to secure more funds. “Unfortunately, we did not achieve the commercial success we were looking for”, wrote the founder.
Back then, Chin had promised investors repayment while the team worked out a plan. However, the SEC discovered that he failed to stick with his promise and did not return any funds to investors. Rather, the top executive diverted some earnings into his personal bank account.
On this account, the court has permanently restrained Thor and Chin from participating, directly or indirectly, in any crypto asset securities offering. However, the latter is allowed to purchase or sell securities for his personal account. This came along with liability of a civil penalty of $150,000 for the founder.
Thor Technologies, on the other hand, is liable for disgorgement of $744,555, along with prejudgment interest of $158,638.06. Both the defendants have been ordered to pay the respective amounts within 30 days after the entry of this final judgment. The SEC is entitled to enforce the court’s judgment for disgorgement, prejudgment interest, and penalties by all legal means.
The SEC has been quite vigilant with crypto companies when it comes to regulation of their activities. This includes its lawsuits with San-Francisco based tech company Ripple Labs and American cryptocurrency exchange Coinbase.
Recently, in its case against the latter, the SEC received support from US state authorities and legal experts in its argument that Coinbase operated an unregistered securities exchange.
Ripple Labs, on the other hand, won a partial victory in its case with the SEC. In July, District Judge Analisa Torres ruled that Ripple’s $XRP sales do not constitute an offer of investment contract. The regulatory watchdog had alleged that Ripple conducted unregistered offers and sales of its token in three different categories.
While the court acknowledged that the institutional sale of $XRP violated securities law, it remained unconvinced by the SEC’s third allegation where it accused Ripple of making ‘Other Distributions’ under written contracts, involving distributions to employees as compensation and to third parties for Ripple’s Xpring initiative.
