The US Securities and Exchange Commission (SEC) has halted registration for a pair of digital tokens offered by Wyoming-based decentralized autonomous organization (DAO) American Cryptofed.

In a statement, the financial regulator accused the company of providing misleading information to investors in its regulatory filings. The SEC said that American Cryptofed “filed a materially deficient and misleading” form when it submitted an S-1 requesting registration for the Locke and Ducat tokens in September. Locke was to be used for governance, while Ducat would have been for transactions.  

The SEC also said the submission failed to “contain certain required information about the two tokens as well as about American CryptoFed’s business, management, and financial condition, including audited financial statements.” The regulator also found that the form had “inconsistent statements” about whether or not the tokens were securities. 

Meanwhile, American Cryptofed CEO Marian Orr took issue with the SEC’s view that the tokens are securities. She said the company had been trying to discuss the issue with the SEC when the agency refused to respond to the firm’s rebuttal in October.

“The purported ‘deficiencies’ the SEC referred to were the lack of attributes inherent to securities,” Orr said. “These are attributes that the two tokens (Locke and Ducat) of a decentralized blockchain-based CryptoFed DAO monetary system will never have.”

CryptoFed touts itself as the first legal DAO out of Wyoming. This occurred after the state passed a heavily contested law allowing DAOs to seek state charter and official recognition as limited liability companies.

The frustrations expressed by the executive were anticipated by SEC Commissioner Hester Peirce, who believes the regulator should be more cooperative with crypto firms. She had told the Wall Street Journal that the SEC should take a more active role to collaborate with crypto firms. Otherwise, the process of complying with SEC rules would be “tremendously hard” for startups, Peirce emphasized.

She also acknowledged that a lack of clearer guidance on the part of the regulator had often kept potentially sympathetic firms at bay, lest they fall afoul officially. “I think a lot of people are avoiding trying to build things in the SEC space precisely because it’s so difficult to navigate that,” Peirce said.

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