The United States Securities and Exchange Commission (SEC) has taken action against Paragon Coin over the firm’s failure to pay a fine imposed on it back in 2018.
On February 24, 2021, the SEC filed an application with the Delaware District Court to enforce Paragon Coin to comply with a Commission order entered against it on November 16, 2018, that imposed injunctive relief and a civil penalty of $250,000, of which $75,000, plus interest, remains due and owing.
On November 16, 2018, the Commission issued an order, on consent, making findings, imposing penalties and a cease-and-desist order against Paragon.
The SEC’s Order found that from August 2017 through October 2017, Paragon offered and sold digital tokens to be issued on a blockchain, or a distributed ledger, to U.S. customers. Paragon conducted the offering to raise capital for, among other things, the development and implementation of a plan to add blockchain technology to the cannabis industry.
The tokens constituted securities under the federal securities laws. However, Paragon did not register the offering pursuant to the federal securities laws, nor did it attempt to qualify for an exemption to the registration requirements.
As a result of these actions, the Commission Order found that Paragon willfully violated Sections 5(a) and (c) of the Securities Act, 15 U.S.C. §§77e(a) and (c), and ordered Paragon to cease and desist from committing or causing any violations and any future violations of Sections 5(a) and (c) of the Securities Act. It also ordered Paragon to pay a civil penalty of $250,000 in a series of installments: $100,000 due within 30 days; $75,000 due within 120 days; and $75,000 due within 240 days of the date of entry of the Commission Order.
Paragon made the first two installment payments of $100,000 and $75,000, but failed to make the final payment of $75,000. Therefore, the balance of $75,000, together with additional interest pursuant to 31 U.S.C. § 3717, remains due and owing to regulator.
The SEC requests that the Court enter an order directing Paragon to show cause why the Court should not enter a judgment enforcing its compliance with the Commission Order. The regulator also seeks entry of a judgment enforcing the Commission Order and requiring that Paragon: (1) pay the outstanding civil penalty balance of $75,000 plus interest pursuant to 31 U.S.C. § 3717, as well as postjudgment interest pursuant to 28 U.S.C. § 1961; and (2) comply with the injunctive relief set forth in the Commission Order.