The U.S. Securities and Exchange Commission has broken new regulatory ground by charging a hedge fund manager and the owners of TokenLot with registration violations related to digital assets.

The SEC’s case against TokenLot, a self-described “ICO Superstore,” is its first charging unregistered broker-dealers for selling digital tokens while the case against Crypto Asset Management (CAM) is its first finding a registration violation by a hedge fund manager based on its investments in crypto assets.

As part of a settlement with the SEC, TokenLot and its owners — Lenny Kugel and Eli Lewitt — agreed to pay disgorgement of $471,000. Kugel and Lewis will also pay fines of $45,000 each.

“U.S. securities laws protect investors by subjecting broker-dealers and other gatekeepers to SEC oversight, including those offering ICOs and secondary trading in digital tokens,” Stephanie Avakian, co-director of the SEC’s Enforcement Division, said in a news release.

CAM’s settlement with the SEC requires the fund and sole principal Timothy Enneking to pay a penalty of $200,000.

The commission has intensified its scrutiny of digital assets since finding last year that some tokens may be considered securities, making their issuance, sale and trading subject to federal laws.

“Whether a particular investment transaction involves the offer or sale of a security — regardless of the terminology or technology used — will depend on the facts and circumstances, including the economic realities of the transaction,” it said at the time.

In the TokenLot case, the SEC said Kugel and Lewitt solicited investors, took thousands of customer orders for digital tokens, processed investor funds, and handled more than 200 different digital tokens in connection with both initial coin offerings and their own secondary market activities.

“Because the digital tokens issued in the ICOs and traded by respondents included securities, the respondents’ activities required broker-dealer registration with the Commission,” the SEC said in an administrative order.

CAM allegedly raised more than $3.6 million from 44 investors for the purpose of investing in digital assets. According to the SEC, it violated securities laws by failing to register its Crypto Asset Fund as an investment company.

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