XBT Corp. SARL, d/b/a First Global Credit, Securities Act Release No. 10723, Securities Exchange Act Release No. 87428

On October 31, 2019, the SEC issued an order instituting cease-and-desist proceedings pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the Securities Exchange Act of 1934, making findings, and imposing a cease-and-desist order with respect to XBT Corp. SARL (“XBT”) in connection with its alleged actions as an unregistered dealer in offering and selling security-based swaps in violation of Section 5(e) of the Securities Act and Sections 6(1) and 15(a) of the Exchange Act. The order was part of a settlement between XBT and the SEC.

XBT is a Swiss company that allowed its customers to invest in the stock market using cryptocurrencies without first exchanging those cryptocurrencies for fiat. From 2014 to 2019, XBT offered and sold security-based swaps to its customers through its website. XBT was not registered with the SEC while offering and selling those security-based swaps to U.S. investors. XBT also did not inquire into, or require investors to meet, certain asset or income thresholds before engaging in the swaps.

The SEC determined that XBT violated Section 5(e) of the Securities Act and Section 6(1) of the Exchange Act because the swaps were not executed with eligible contract participants, XBT did not act with an effective registration statement, and the swaps were not effected on a national securities exchange. The SEC determined that XBT violated Section 15(a) of the Exchange Act because it acted as an unregistered dealer in offering and selling the swaps. The SEC required XBT to (1) cease and desist from violating the Securities Act and the Exchange Act and (2) pay approximately US $132,000 in disgorgement, prejudgment interest, and a monetary penalty. XBT did not admit or deny the SEC’s findings.

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