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SEC First Imposes Civil Penalties for ICO Securities Offering Registration Violation

Abstract : Both of two concerning startups agreed to register their ICO tokens as securities. These are SEC’s first cases imposing civil penalties soley for ICO securities offering registration violations.

Chaindder
Chaindder

Nov 17

November 16 (ChainDD) On November 15 EST Time, The U.S. Securities and Exchange Commision (SEC) announced reached settlement with CarrierEQ Inc (Airfox) and Paragon Coin Inc which were charged for unregistration of their initial coin offerings (ICOs) as securities. Both of the two startups agreed to register their ICO tokens as securities. These are SEC’s first cases imposing civil penalties soley for ICO securities offering registration violations.

According to SEC’s announcement, Airfox and Paragon Coin respectively raised $15 million and $12 million through ICO last year. SEC determined their ICOs are securities offerings under the federal securities laws, nor did they qualify for an exemption to the registration requirements.

Besides registering their tokens as securities, the two companies also will refund investors, file periodic reports with SEC, and each pay $250,000 penalties.

SEC has made clear that companies that issue securities through ICO are required to comply with the existing statutes and rules governing the registration of securities, said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division. “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.”

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