Major fintech investment adviser, Titan Global Capital Management, based in New York, found itself within the regulatory crosshairs this August, specifically at the behest of the US Securities and Exchange Commission (SEC). The company has since concurred to comply with the SEC’s cease-and-desist order alongside parting with more than $1 million to settle purported misrepresentations over its cryptocurrency offerings.
The regulatory body accused Titan of deceiving its investors on issues concerning the custody of crypto assets, claiming the adviser released contradictory information. It’s reported that the firm promised investors potential “annualized” gains of up to 2,700% through its Titan Crypto strategy. These figures emerged from a fabricated theoretical three-week period where no tangible trading happened, a plot that flew directly in the face of the SEC’s revised marketing rule that was established in December 2020.
Osman Nawaz, SEC senior enforcement officer, weighed in on the matter, stating that Titan failed to comply with requirements aimed at preventing fraudulent use of hypothetical performance metrics. Nawaz sees this as a warning to other advisers to ensure compliance.
A fine of more than $1 million now looms over Titan. This includes disgorgement, prejudgment interest, and a civil penalty, of which the penalty alone amounts to $850,000 – money that will directly assist the affected clients. Despite this, Titan has neither accepted nor denied the SEC’s findings but has agreed to cooperate fully.
The SEC has begun emphasizing more on the compliance of crypto investment advisers, which goes hand in hand with its recent tightening grip on the digital asset industry under Gary Gensler’s chairmanship. The regulatory body has already taken action against prominent names such as Binance and Coinbase for allegedly facilitating unregistered securities.
The digital asset world may soon experience a seismic shift, due to the new rules regarding customer custody proposed by the SEC. These new regulations potentially pose an adverse effect for cryptocurrency firms as they necessitate the correctness of communicated information to both prospective and current investors. While Titan’s case serves as a warning, it’s pivotal that firms operating within this domain don’t treat it as an isolated event, but as a potential harbinger of what might soon become routine. This paints a murky picture for the digital asset industry, now grappling with the reality of an overarching regulatory environment.
Source: Cryptonews
