The Securities and Exchange Commission today announced its first-ever enforcement action finding an investment company registration violation by a hedge fund manager based on its investments in digital assets.

The SEC entered an order finding that Crypto Asset Management LP (CAM) offered a fund that operated as an unregistered investment company while falsely marketing it as the “first regulated crypto asset fund in the United States.”  According to the SEC’s order, CAM, a California-based hedge fund manager, and its sole principal Timothy Enneking raised more than $3.6 million over a four-month period in late 2017 while falsely claiming that the fund was regulated by the SEC and had filed a registration statement with the agency.  By engaging in an unregistered non-exempt public offering and investing more than 40 percent of the fund’s assets in digital asset securities, CAM caused the fund to operate as an unregistered investment company.  After being contacted by the SEC staff, CAM ceased its public offering and offered buy backs to affected investors.