SEC Investigating Crypto Company Salt's $50M Sale

Salt Lending Holdings Inc., a lender that uses cryptocurrencies as collateral, is under investigation by the Securities and Exchange Commission for a roughly $50 million dollar ICO it held in August 2017.Salt, a company tied to prominent bitcoin entrepreneur Erik Voorhees, received a subpoena from the SEC in February seeking records related to a $50 million cryptocurrency sale it held last year https://t.

The company allows customers to use cryptocurrency or other blockchain-based assets as loan collateral, regardless of their credit score, thereby circumventing the traditional lending structure.

The company was subpoenaed in February for records of the sale.

The SEC's current probe is to uncover whether Voorhees broke any laws with his involvement in last year's coin sale.

The SEC is looking into whether the $50 million dollar sale should have been declared a securities offering and registered with the SEC. Officials are also combing through documentation provided by Salt to determine how those involved in the sale acquired their tokens, how proceeds from the sale were used, and whether Voorhees violated a 2014 SEC settlement banning him from fundraising.

In 2014, the SEC investigated Voorhees for his role in promoting the companies SatoshiDICE and FeedZeBirds which raised money from investors in Bitcoin.

"A provision in the settlement makes him a so-called 'bad actor' unable to rely on an SEC safe harbor for private, unregulated stock sales."

A separate lawsuit was filed against Salt on Tuesday in Colorado state court by a former employee, who alleged the company gave some of its executives and their families a better deal on loan terms.

The suit also claims Salt lost $4 million in crypto due to a hack in February.

Despite this, Salt does list him as a director on their form D filed with the SEC in 2016, and on promotional materials used to promote the ICO, according to the WSJ. If the SEC concludes that Voorhees' involvement prevented the company from raising funds privately, civil penalties may be in order.