Gladius Network ICO Issuer Settles with the SEC for $12.7 Million Unregistered Securities Offering
The Securities and Exchange Commission (SEC) has agreed to terms of a settlement with the crypto start-up Gladius Network LLC the SEC announced Wednesday. Charges included running an unregistered security offering within the U.S.
It was explained in the press release by the SEC that the ICO Gladius Network conducted near the end of 2017, which resulted in $12.7 million raised in the form of almost 24,000 ETH, was not registered. They were required to be registered as all ICOs of that nature are unless they fit with an exemption under the federal registration requirements laws and it did not.
Gladius has agreed to register its tokens under the Securities Exchange Act of 1934 and return funds at the request of any of the investors involved, per the settlement agreement. In exchange, the start-up will not have to admit any wrongdoing or agree with/deny the findings of the SEC.
Previous settlements with the SEC by other crypto start-ups for the same charges includes Airfox and Paragon Coin. Interestingly, the phrase “unregistered ICO” was not used in those case but was here, echoing a past statements by the commission’s chairman Jay Clayton: “I believe every ICO I’ve seen is a security.”
Because Gladius “expressed an interest in taking prompt remedial steps,” and reported its own failure to the regulator, the SEC has decided not to impose any penalties like it has in the past.
Statements by the SEC cyber unit Chief Robert Cohen include:
“The SEC has been clear that companies must comply with the securities laws when issuing digital tokens that are securities…..
Today’s case shows the benefit of self-reporting and taking proactive steps to remediate unregistered offerings.”
The SEC also noted that Gladius self-reported shortly after they released a DAO report, which included findings, that ICOs can qualify as security offerings.