The SEC announced that a California-based blockchain company, which raised $25 million via an initial coin listing (ICO), has agreed to pay $400,000 in fines and return the funds to token buyers.
BitClave PTE Ltd . must make these payments in accordance to an SEC settlement. In 2017, BitClave PTE Ltd . introduced a plan to sell its Consumer Activity Tokens to around 9,500 investors in the US. In the same year, the project changed its business model to market and develop a blockchain-based search platform that allows targeted consumer advertising. To raise the funds needed to build the service, the ICO was pursued.
The SEC made sure to point out that BitClave had not been accused of fraud but of failing to register the tokens as securities. The agreement stipulates that BitClave will reimburse investors who have been harmed by a compensation fund called the “Fair Fund.”
The SEC also used other cryptocurrency-related settlements to compensate investors who took part in initial coin offerings. The ICO issuer either voluntarily returned all token sales proceeds or had to submit to a claims process.
BitClave will pay nearly $29 million in disgorgement and interest to settle the matter. These payments will be handed over to the SEC to be distributed to investors who were harmed by ICO.
The agency explained that BitClave was selling securities without registering or qualifying for an exemption.
Hester Peirce (an SEC regulator dubbed ” CyberMom”) had floated the idea to offer a’safe harbour’ to ICOs, so that certain crypto tokens do not become securities. Peirce suggested a three year grace period for crypto startups to adjust their token-based fundraising models. Crypto tokens that meet certain criteria could be issued more freely, before the SEC decides whether they must comply with federal securities laws.
