On April 27, the SEC announced the settlement of an enforcement action filed in the U.S. District Court for the Southern District of California against a Nevada-based financial technology company, the company’s former CEO, who stepped down in October 2025, and the company’s former chairman of the board, who stepped down in August 2025. The action alleged that the defendants defrauded investors by falsely depicting the company in its public filings as a cutting-edge blockchain-based payment solutions provider. According to the complaint, the company’s filings with the SEC from October 2020 through May 2025 claimed it possessed proprietary blockchain technology that served as the settlement engine for all transactions and used digital tokens to facilitate credit and debit card transactions. The SEC alleged none of this was true, asserting that the company: (i) never processed any transactions through a blockchain; (ii) did not own any proprietary blockchain technology; and (iii) never implemented a functional digital token system. Instead, the complaint alleges that the company operated as a reseller of standard credit card and ACH processing services to high-risk merchants, primarily cannabis dispensaries — a fact the SEC asserts the company failed to disclose in public filings despite the purported material risk posed to banking relationships and revenue.

Under the terms of the settlement, the company consented to a permanent injunction barring future violations of the antifraud and reporting provisions of the federal securities laws. Both the company’s former CEO and the former chairman of the board individually consented to a permanent injunction against violating antifraud provisions under the Exchange Act and Securities Act and aiding and abetting reporting violations, a total civil penalty of $230,464, and a five-year prohibition from serving as an officer or director of any public company, though the defendants neither admitted nor denied the allegations.