According to an official press release happened on Nov. 16 , the U.S. securities and exchange commission (SEC), two initial coin offerings(ICOs) has been imposed with civil penalties, solely over their failure to register token and sales.
The two companies, Carrier EQ Inc.(Airfox) and Paragon coin Inc., both of whom reportedly conducted their token sales last year after the SEC had already “warned” that ICOs could be deemed securities offerings in its July 2017 DAO report of investigation. The SEC states it has reached settlements with both two companies.
In order to reach settlements, both companies have to pay penalties of $250,000 each & also to return funds to harmed investors, register their tokens as securities and file periodic reports with the commission.
The enforcement action implies that both companies have to register with the SEC under U.S. Federal law. It also says that both Airfox and Paragon’s tokens were judged to have been securities i.e investments whose return was dependant on a third party’s efforts or success.
Paragon Coin , raised around $ 2 million to develop blockchain – based solutions for the cannabis industry. Airfox, for its part, is a Boston-based start up that raised around $15 million worth of tokens to fund the development of its emerging markets – focused tokenized data system.
The co-director of the SEC’s enforcement, Stephanie Avakian, is quoted as saying that ” these cases tell those who are considering taking similar actions that we continue to be on the lookout for violations as the federal securities laws with respect to digital assets.
The orders in their settlements will require both Airfox and Paragon to file third – party audited financial statements and other disclosures aimed at providing investor projection, similar to what is required of Initial Public Offerings(IPOs). According to a Wall street journal report today, both companies have neither admitted nor denied the SEC claims.
The SEC has informed that the Airfox and Paragon cases follow upon the commission’s ” first non- fraud ICO registration case,” involving a company called ” Munchee Inc.” Munchee has avoided any kind of penalties from the regulator by returning all proceeds to investors and ceasing its offerings before any token insurance.
Once associated with high-profiles crypto industry stalwart, Erik Voorhees, crypto loans firm Salt is also under scanner as the SEC has opened a probe over its 2017 $50 million token sale.
Also today, the suspect has pleaded guilty to make false statements in order to obtain money from investors at the center of U. S.