Crypto startup Gladius self-reported itself to the Securities and Exchange Commission for conducting an unregistered initial coin offering (ICO). The Commission specifies that the startup did not register its tokens with the agency and its “ICO did not qualify for an exemption from registration requirements.”
In an SEC’s report, Gladius had conducted an ICO in late 2017 after the SEC has warned in its DAO Report of Investigation that ICOs can be securities offerings. Gladius is a Washington DC-based crypto startup that plans to develop a network for renting spare computer bandwidth to fight against cyber attacks and increase the delivery speed. It approximately raised million in digital assets to finance its module.
Gladius self-reported to SEC’s Enforcement staff in the summer of 2018. It expressed taking remedial steps and cooperate with the investigation. It has also promised to compensate the investors and to register the tokens as a class of securities. The SEC will not impose any penalty as the company brought forth misconduct.
“The SEC has been clear that companies must comply with the securities laws when issuing digital tokens that are securities,” said Robert A. Cohen, Chief of the SEC’s Cyber Unit. “Today’s case shows the benefit of self-reporting and taking proactive steps to remediate unregistered offerings.”
Crypto startup Gladius will register its tokens as security pursuant to the Securities Exchange Act of 1934. It will also file the required periodic reports to the Commission. Gladius obliged to the order without denying or admitting to the findings, as stated on SEC press release.
In November 2018, the SEC had imposed civil penalties against two ICOs over failure to register their tokens sales. The Commission had announced in January that cryptocurrencies are the top examination priorities this year. Similarly, 2018 has witnessed a significant uprise in ICO examination by the SEC to sell unregistered securities to large scale investors, as mentioned on Cointelegraph.
Crypto startup Gladius was able to escape the civil penalties after reporting the unregistered initial coin offering, and it shows the benefits of taking proactive steps.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]