WASHINGTON (Reuters) – On Friday, the US Securities and Exchange Commission (US Securities and Exchange Commission) cleared charges with two technology companies for the inappropriate offering of digital tokens. They have committed to register their bids as securities and to reimburse investors.
FILE PHOTO: The US Securities and Exchange Commission logo adorns an office door on June 24, 2011 at the SEC's headquarters in Washington. REUTERS / Jonathan Ernst / File Photo
The action marked for the first time that the regulator has imposed sanctions on tech startups that exceed their registration rules when offering "first coins". She also emphasizes that the SEC's oversight of the crypto-currency space is being stepped up to protect investors from potential fraudsters.
The SEC warned in March that most token offerings would be subject to the same standards as offering securities and would impose fines on bad players who violate securities laws.
CarrierEQ Inc. (Airfox) and Paragon Coin Inc. had raised $ 27 million from investors to arrange repayment. Everyone will pay $ 250,000 in fines in the settlement, the regulator said in a statement.
"Airfox expects to expand its blockchain platform within a regulatory framework," the company said in a statement.
The companies have not acknowledged or denied the SEC's indictments, but both agreed to submit periodic reports for at least 12 months.
"These cases show those considering similar action that we continue to look for violations of federal securities laws on digital assets," said Stephanie Avakian, one of the SEC's regulators.
The SEC has indicated that companies wishing to raise money through ICOs must comply with the usual bidding rules by either registering for an IPO or seeking exemption from private placement or crowdfunding requirements.
It also said that companies wishing to trade in tokens should consider registering as a stock exchange or as an alternative trading system.
This month, the SEC filed a lawsuit against the founder of the crypto-currency token trading platform EtherDelta for pursuing an unregistered securities exchange in another milestone enforcement action.
"The Securities and Exchange Commission has warned issuers and other interested parties that most" ICOs "are offers of securities or securities," said Dina Ellis Rochkind of New York law firm Paul Hastings LLP in an e-mail.
Reporting by Katanga Johnson; Editing by Bernadette Baum and Paul Simao