Shipchain, a blockchain shipping, and logistics company were issued a cease and desist order by the South Carolina Attorney General’s office on Tuesday. In its initial response, the company claimed that it was not aware of its token, SHIP, was available to the state residents.
In its public “statement“, the firm said, “ShipChain does not believe that [its] tokens are securities.” This was in answer to the allegations of the agency’s securities division that ShipChain “continuously offered investment opportunities in the ShipChain platform and the corresponding tokens to South Carolina residents” but neither registered as a broker nor asked for an exemption from the registration requirements.
The company stated that if the South Carolina’s Securities Commissioner’s office “had ever contacted ShipChain, ShipChain would have shown that its private sale of tokens was conducted in a manner consistent with applicable securities laws requirements.”
The blockchain startup argued that their tokens were sold only to
certified investors, clarifying “that none of the purchasers of SHIPs in that initial sale are South Carolina citizens or businesses.” They continued, “ShipChain is not aware that SHIPs were even offered in South Carolina or to any South Carolinian during the private sale.”
CEO John Monarch told Coindesk that
“ShipChain did not conduct a public sale, nor sell to South Carolina residents/businesses, and has no plans to in the foreseeable future.”
He said further:
“Our software development team is in South Carolina and since January we have not been offering, issuing, or selling tokens, and already had no plans to do so for the foreseeable future. Therefore, we are confident that there is no way for this to occur.”
As reported earlier, ShipChain is given 30 days from the order’s issuance to request for a dialogue with regulating authority.