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SEC Authorities Presses charges against Two ICO Startups

Pooja
Pooja

The U.S. Securities and Exchange Commission made a recent announcement on filing security charges on two well-known ICO startups. Namely  CarrierEQ Inc., also known as Airfox, and Paragon Coin Inc who made their debut in the crypto industry via crowdfunding process in the last year.

The two ICOs were reportedly penalized for not registering their token sales to the SEC department and also had received an initial warning of ICO’s being deemed from securities offerings.

As the consequence, the companies had to – ” return funds to harmed investors, register their tokens as securities, file periodic reports with the Commission, and pay penalties of $250,000 each”.

Certainly, these are the lessons to be learned for all the upcoming ICO security offerings. Also, the statement from SEC highlighted that – “this marked as first cases imposing civil penalties solely for ICO securities offering registration violations.”

On a side note, the SEC alerted all the ICO startups to stick with regulations laid out by the authorities and explained that,

These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets

Furthermore, the statement also says that an ICO named Munchee can be treated as follow up case wherein it reportedly returned all proceeds to investors and ceased its offering before any token issuance, thereby avoiding any penalties from the regulator.

Interestingly, the Wall Street Journal(WSJ) publication reported that Paragon and Airfox have neither admitted nor denied the SEC claims. The orders in their settlements will require both companies to file third-party audited financial statements and other disclosures aimed at providing investor protection, similar to what is required of Initial Public Offerings (IPOs).

All these instances are the indications to stay vigilant and adhere to regulations. What do you think about this? Let us know in below comments.

SECusa

Pooja

Lead writer at Wolfcone.com and avid reader. My interests lie in everything and anything related to technology. I firmly believe cryptocurrency has the power to revolutionize world economy and blockc