List of Blockchain Projects, People and ICOs the SEC Charged
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 people: Sergii "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 People: Jonathan 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 People: Raymond 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.
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