SEC Charges ICO With Selling Unregistered Securities After Startup Self-Reports
The U.S. Securities and Exchange Commission has charged crypto firm Gladius Network with selling unregistered securities after the company self-reported.
The United States Securities and Exchange Commission (SEC) has charged crypto firm Gladius Network with selling unregistered securities after the company self-reported to the commission, an SEC press release reveals on Feb. 20.
Gladius reportedly raised approximately $12.7 million in cryptocurrency during its initial coin offering (ICO) in late 2017, after the SEC had warned that tokens offered in such sales can be classified as securities under U.S. law. The commission specifies that the startup did not register its tokens with the agency and its “ICO did not qualify for an exemption from registration requirements.”
According to the press release, however, Gladius self-reported to the securities regulator in the summer of last year. The report also specifies:
“The SEC did not impose a penalty because the company self-reported the conduct, agreed to compensate investors, and will register the tokens as a class of securities.”
The company will reportedly return funds to investors who request it and register its token as a security, in accordance with the Securities Exchange Act of 1934. Robert A. Cohen, Chief of the SEC’s Cyber Unit, commented in the press release that the case “shows the benefit of self-reporting and taking proactive steps to remediate unregistered offerings.”
As Cointelegraph reported in November of last year, SEC then imposed civil penalties against two ICOs over their failure to register their token sales in a self-described first.
Moreover, in January, the agency released an official statement saying that cryptocurrencies are one of the commission’s top examination priorities this year. In the same month, news broke that 2018 witnessed a significant uptick in the number of ICOs authorized by the SEC to sell unregistered securities to large-scale investors, in what it refers to as an exemption.