SEC fines First Global Credit over unregistered business

Chris Hamblin

4 November 2019

According to the SEC's order, First Global Credit used a variety of marketing methods to target and solicit US individuals to deposit and use bitcoins to buy and sell a variety of investment products. Although First Global Credit used outlandish terminology to describe the investments it offered, including "bitcoin Asset Linked Notes," investors were able to participate in the price movements of securities, including those listed on US securities exchanges, without owning them. US federal securities law treats instruments of this type as security-based swaps. First Global Credit offered these swaps to US investors without complying with the registration and exchange requirements governing security-based swaps, which were enacted as part of the Dodd-Frank Act.

The SEC is under the impression that the company thought that it could circumvent its obligations merely by using its own terminology to describe the swap transaction.

Without admitting or denying anything, First Global Credit has consented to a cease-and-desist order and agreed to pay disgorgement of $31,687 and a penalty of $100,000. In a parallel action, the Commodity Futures Trading Commission (CFTC) announced a settlement with First Global Credit arising from similar conduct.