According to the official website of the United States Securities and Exchange Commission (SEC), “ICOs, based on specific facts, may be securities offerings, and fall under the SEC’s jurisdiction of enforcing federal securities laws.”

An Initial Coin Offering (ICO), which is the cryptocurrency industry’s equivalent to an Initial Public Offering (IPO), acts as a way to raise funds through the sale of tokens. The SEC has been consistent in its judgement that ICO’s are a type of securities offerings. The SEC states that any ICO needs to registered with the regulator. The SEC does not only charge unregistered ICOs but also unregistered ICO-related services or products or inappropriate behaviors.

“The securities laws require promoters, including both people and entities, to disclose compensation they receive for touting investments so that potential investors are aware they are viewing a paid promotional item,” said Melissa Hodgman, Associate Director of the SEC’s Enforcement Division. “This requirement applies regardless of whether the securities being touted are issued using traditional certificates or on the blockchain.”

While speaking at the LA Blockchain Summit on Oct. 6, Ripple’s co-founder Chris Larsen said that the United States is still lagging behind the rest of the world in policy and regulation for the coming transition of the global financial system into the digital space and believes the constant punitive actions taken by the SEC against blockchain and digital currency projects is the main cause for lag.

Larsen said:

“The message is blockchain and digital currencies are not welcome in the US […] You want to be in this business, you probably should be going somewhere else.”

Below is a list of some of the blockchain projects and crypto figures who have been charged by the SEC over the years. 

2020

Date: October 5, 2020

Person or people: John McAfee

Reason for SEC action: Fraudulently touting ICOs. He was allegedly paid more than $23 million in digital assets for the promotion of ICOs but claims his promotion was impartial and independent of any compensation, which he also refutes receiving.

Result: The Tax Division of the Department of Justice also charged John McAfee with tax evasion and failure to file tax returns, according to an unsealed indictment that was revealed on October 5. he was arrested in Spain. The SEC seeks permanent injunctive relief, conduct-based injunctions, the return of allegedly ill-gotten gains, and civil penalties, barring McAfee from serving as a public company officer and director.

Read more: here

 

Date: September 30, 2020

ICO amount: Approximately $47 million

Company: Salt Blockchain Inc.

Company mission: Develop its business of offering loans backed by blockchain assets.

Reason: Unregistered ICO

Result: Return funds and pay a $250,000 civil penalty. The company has also agreed to register its tokens as securities and must file required periodic reports with the SEC.

 

Date: September 25, 2020

ICO amount: $2.4 million

Company: SoluTech, Inc.

Person or people: Nathan Pitruzzello (former CEO)

Token: SCRL (later renamed XD)

Company mission: Development of a blockchain-based platform called the Scroll Network and additional technology products.

Reason: Unregistered ICO

Result: Destroy all SCRL in its possession, issue requests to remove SCRL from any further trading on third-party digital asset trading platforms. The founder refrained from participating in any offering of any digital asset security and paid a penalty of $25,000 over a three-year period.

 

Date: Sept. 15, 2020

Company: Unikrn Inc.

Headquarter or operation: Seattle, Washington

ICO amount: Approximately $31 million

Company mission: Online eSports gaming and gambling platform.

Result: Paying a $6.1 million penalty (all of the company’s assets) to investors through a Fair Fund. Disable the UKG tokens.

Headquarter or operation: Connecticut

 

Date: Sept. 11, 2020

Person or people: Ryan Felton (film producer), Clifford Harris aka T.I. (rapper and actor) and three others

Projects: FLiK and CoinSpark

Headquarter or operation: Atlanta

Company mission: FLiK is a digital streaming platform and CoinSpark is a digital asset trading platform.

Reason: Two unregistered and fraudulent ICOs.

Result: Return ICO gains plus prejudgment interest, a penalty of $25,000 and to conduct-based injunctions prohibiting them from participating in the issuance, purchase, offer, or sale of any digital asset security for a period of five years. (subject to court approval). Three of Felton’s family members and an LLC that he established were also named as relief defendants. The SEC’s order against T.I. requires him to pay a $75,000 civil monetary penalty and not participate in offerings or sales of digital-asset securities for at least five years.

 

Date: Aug. 13, 2020

Person or people: Rajesh Pavithran

ICO amount: $5 million

Company: Boon.Tech

Company mission: Recruitment platform that connects employers posting jobs with freelancers seeking work.

Reason: Unregistered ICO.

Result: Forced to return $5 million raised plus prejudgment interest of $600,334 and destroy all Boon Coins he held, as well as delist the coins from all crypto exchange and trading platform. In addition, he paid a penalty of $150,000 and was barrred from serving as an officer or director of a public company.

Headquarter or operation: Virginia

 

Date: May 28, 2020

ICO amount: $25.5 Million

Company: BitClave PTE Ltd. (BitClave)

Reason: Unregistered ICO

Result: Returned proceeds from the offering and paid additional monetary relief which was distributed to investors through a Fair Fund.

 

Date: April 24, 2020

ICO amount: More than $1.8 million

Company: Dropil, Inc.

Person or people: Jeremy McAlpine, Zachary Matar, and Patrick O’Hara (founders)

Token: DROP

Company mission: Investor funds would be pooled to trade various digital assets by a “trading bot,” called Dex, using an algorithm designed and tested by Dropil.

Reason: Unregistered ICO

Result: Seeks disgorgement of ill-gotten gains plus prejudgment interest, penalties, and injunctive relief.

Headquarter or operation: California

 

Date: Jan. 17, 2020

ICO amount: over $30 million

Company: CG Blockchain Inc.

Company mission: To develop technologies for hedge funds and other investors in digital assets.

Reason: Unregistered ICO, using a Fake Identity.

Result: Gains plus interest, penalties, and injunctive relief. The SEC also sought orders barring Manor and Pardo from acting as officers or directors of public companies and from participating in future securities offerings.

 

Date of settle: Feb. 19, 2020 

ICO amount: approximately $45 million

Company: Enigma MPC

Token: ENG

Reason: Unregistered ICO

Result: Return of funds to investors, $500,000 penalty

Headquarter or operation: San Francisco and Israel

 

Date: January 21, 2020

Company: Opporty International, Inc.

Person or peopleSergii “Sergey” Grybniak

ICO amount: approximately $600,000

Token: OPP

Reason: Unregistered ICO

Result: Permanent injunctions, conduct-based injunctions prohibiting the offering of digital or other securities, disgorgement plus interest, and civil penalties

 

2019

 

Date: Dec. 18, 2019

Company: Blockchain of Things Inc. (BCOT)

ICO amount: nearly $13 million

Company mission: To develop and implement its business plans, including developing its blockchain-based technology and platform.

Result: Return funds to those investors. The company registered its tokens as securities pursuant.

 

Date: Dec. 11, 2019

ICO amount: more than $42 million

Person or people: Eran Eyal

Company: UnitedData

Project: Shopin

Company mission: Universal shopper profiles, maintained on the blockchain, that would track customer purchase histories across online retailers and recommend products based on this information.

Reason: Unregistered ICO

Result: Seek permanent injunctions, disgorgement with interest, and civil penalties

 

Date: Oct. 11, 2019

ICO amount: more than $1.7 billion

Company: Telegram

Company mission: mobile messaging application. funds raised for business and Telegram Open Network (TON Blockchain)

Reason: Unregistered ICO

Result: Return $1.2 billion to investors and pay an $18.5 million penalty

 

Date: September 30, 2019

Company: Nebulous, Inc. (Nebulous)

Company mission: decentralized cloud storage network (Sia)

ICO amount: $120,000

Reason: Unregistered ICO

Result: pay disgorgement of $120,000, prejudgment interest of $24,601, and an $80,000 civil money penalty.

Headquarter or operation: Boston, Massachusetts

 

Date: Sept. 30, 2019

ICO amount: several billion dollars

Company: Block.one

Reasons: Unregistered ICO, investors including a portion from US.

Result: paying a $24 million civil penalty

Headquarter or Operation: Virginia and Hong Kong

Read More: here

 

Date: Sept. 18, 2019

ICO amount: $14 million

Person or People: Nikolay Evdokimov (founder)

Company: ICOBox

Company mission: To create a platform for initial coin offerings (ICO)

Token: ICOS

Reasons: The platform raised more than $650 million for dozens of clients

Result: On March 10, 2020, SEC Obtained Judgment Against ICOBox, Ordered them to pay disgorgement and prejudgment interest totaling $16,059,428.99; pay civil penalty of $192,768.

 

Date: Aug. 20, 2019

Company: ICO Rating

Fine amount: $268,998

Reason: Failed to disclose that it was paid by certain issuers whose ICO offerings it rated.

Result: Pay $268,998 to settle charges (pay disgorgement and prejudgment interest of $106,998, and a civil penalty of $162,000)

Headquarter or Operation: Russia

 

Date: August 12, 2019

ICO amount: approximately $6.3 million

Company: SimplyVital Health, Inc.

Project: Health Nexus

Company mission: To create healthcare-related blockchain ecosystem

Token: Called Health Cash, or HLTH

Reason: Unregistered ICO

Result: Return to investors substantially all of the funds raised during its pre-sale offering.

Headquarter or operation: New England

 

Date: August 12, 2019

Person or people: Reginald Middleton

ICO amount: $7,891,600

Companies: Veritaseum, Inc. and Veritaseum, LLC (“Veritaseum”)

Result: pay nearly $9.5 million ($7,891,600 ICO gains, plus $582,535 in prejudgment interest, $1,000,000 civil penalty, permanently barred from serving as an officer or director of a publicly-traded entity.

 

Date: June 4, 2019

ICO amount: $100 million

Company: Kik Interactive Inc.

Token: Kin

Reason: raising more than $55 million from U.S. investors.

Result: Seek permanent injunction, disgorgement plus interest, and a penalty.

Read more: SEC Wins Lawsuit Against Kik’s $100 Million Unregistered ICO

 

Date: May 21, 2019

Company: Argyle Coin, LLC

Person or People: Jose Angel Aman

Purpose: Ponzi scheme

Result: Seek disgorgement of allegedly ill-gotten gains and prejudgment interest from Natural Diamonds, Eagle, Argyle Coin, Aman, Harold Seigel, and the relief defendants, and financial penalties against Natural Diamonds, Eagle, Argyle Coin, Aman, Harold Seigel and Jonathan H. Seigel.

 

Date: Feb. 20, 2019

ICO amount: approximately $12.7 million

Company: Gladius Network LLC

Company mission: To develop a network for renting spare computer bandwidth to defend against cyberattacks and enhance delivery speed

Reason: Unregistered ICO

Result: No penalty because the company self-reported the conduct and compensated investors and registered the tokens as a class of securities

 

Date: September 23, 2019

Amount: approximately $63,000

Company: Fantasy Market

Person or PeopleJonathan C. Lucas

Company mission: A purported online adult entertainment marketplace.

Reason: Unregistered and fraudulent ICO

Result: Orders him to pay a civil penalty of $15,000; and imposes a five-year officer and director bar and a five year conduct-based injunction prohibiting Lucas from participating in any unregistered offering of securities, digital or otherwise, except for securities transactions for his own personal account.

 

2018

Date: Oct. 11, 2018

Company: Blockvest LLC

Person or People: Reginald Buddy Ringgold, III

Reason: Fraudulent ICO, falsely claiming their crypto fund was “licensed and regulated.

Result: Seek injunctions, return of ill-gotten gains plus interest and penalties, and a bar against Ringgold to prohibit him from participating in offering any securities, including digital securities, in the future or making misrepresentations about regulatory approval.

 

Date: Nov. 16, 2018

ICO amount: Approximately $15 million

Company: CarrierEQ Inc. (Airfox)

Purpose: To finance its development of a token-denominated “ecosystem” starting with a mobile application that would allow users in emerging markets to earn tokens and exchange them for data by interacting with advertisements

Reason: Unregistered ICO

Result: Return funds, register the tokens as securities, file periodic reports with the Commission, and pay $250,000 penalty.

(Note: CarrierEQ Inc. and Paragon Coin Inc. are first cases imposing civil penalties solely for ICO securities offering registration violations.)

 

Date: Nov. 16, 2018

ICO amount: Approximately $12 million

Company: Paragon Coin Inc.

Purpose: To develop and implement its business plan to add blockchain technology to the cannabis industry and work toward the legalization of cannabis.

Reason: Unregistered ICO

Result: Return funds, register the tokens as securities, file periodic reports with the Commission, and pay $250,000 penalty.

 

Date: Sept. 11, 2018

Company: TokenLot LLC

Person or People: Lenny Kugel, and Eli L. Lewitt

Project: ICO Superstore

Reason: Unregistered broker-dealers for selling digital tokens after the SEC issued The DAO Report in 2017

Result: Pay $471,000 in disgorgement plus $7,929 in interest, and they will retain an independent third party to destroy TokenLot’s remaining inventory of digital assets, pay penalties of $45,000 each and agreed to industry and penny stock bars and an investment company prohibition with the right to reapply after three years.

 

Date: July 9, 2018

ICO amount: $1.4 million

Company: UBI Blockchain Internet, Ltd.

Person or People: attorney T.J. Jesky, Mark F. DeStefano

Reason: Illegal sales of stock of a company claiming to have a blockchain-related business.

Result: Return approximately $1.4 million of allegedly ill-gotten gains, pay $188,682 in civil penalties and be subject to permanent injunctions.

 

Date: April 20, 2018

ICO amount: $32 million

Company: Centra Tech Inc.

Person or PeopleRaymond Trapani

Reason: Fraudulent ICO

Result: Seek permanent injunctions, the return of allegedly ill-gotten gains plus interest and penalties, as well as bars against Trapani prohibiting him from serving as a public company officer or director and from participating in any offering of digital or other securities.

 

Date: April 2, 2018

Person or People: Sohrab “Sam” Sharma and Robert Farkas

ICO amount: more than $32 million

Reasons: False claims that offer a debit card backed by Visa and MasterCard. posted false or misleading marketing materials to Centra’s website, and paid celebrities to tout the ICO on social media

Company: Centra Tech. Inc.

Result: Both were arrested. Seek permanent injunctions, return of allegedly ill-gotten gains plus interest and penalties, as well as bars against Sharma and Farkas serving as public company officers or directors and from participating in any offering of digital or other securities.

 

Date: March 26, 2018

ICO amount: Approximately $300,000

Company: REcoin Group Foundation; Diamond Reserve Club

Person or People: Maksim Zaslavskiy

Reason: Unregistered ICO

Result: The SEC obtained an emergency court order to freeze the assets of Zaslavskiy and his companies. Seek an officer-and-director bar and a bar from offering digital securities.

 

2017

Date: December 1, 2017

ICO amount: $4,563,468

Company: PlexCorps

Person or People: Dominic LaCroix and Sabrina Paradis-Royer

Token: PlexCoin

Result: On October 2, 2019, ordered to disgorge $4,563,468 ICO gains, plus $348,145 in prejudgment interest, and Lacroix and Paradis-Royer are ordered to each pay a $1,000,000 civil penalty.

 

Image source: Shutterstock

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