SEC Sues ICO & Founder for an Illegal Token Sale of $14.6 Million


The Securities and Exchange Commission has sued ICOBox and its founder Nikolay Evdokimov for conducting an illegal token sale of $14.6 million and acting as unregistered brokers for other digital asset offerings, the federal agency said in its official statement.

According to the SEC's complaint, the initial token offering (ICO) raised roughly $14.6 million on the sale of ICOS tokens in 2017 — without registering them as securities — to more than 2,000 investors.

Failure to Comply with the Federal Securities Laws’ Registration Requirements

Defendants, as per the complaint, claimed that the tokens would increase in value upon trading and that they would be able to swap them at a discount for other tokens available on the ICOBox platform.

The complaint further states that the ICOS tokens are

“virtually worthless.”

Currently, the value of COS tokens — that has a market cap of $1 million and the total market supply of 505,922 ICOS — is $2.41, as per Coinmarketcap.

Furthermore, the defendant alleges that the ICOBox failed to register as a broker but acted as one by facilitating the ICO that raised $650 million.

“By ignoring the registration requirements of the federal securities laws, ICOBox and Evdokimov exposed investors to investments, which are now virtually worthless, without providing information that is critical to making informed investment decisions,”

said Michele Wein Layne, Regional Director of the Los Angeles Regional Office.

The complaint charged both the ICO and its founder with violating the registration requirements of the federal securities laws and further seeks disgorgement with prejudgment interest, injunctive relief, and civil money penalties.

But this Is Not the First Time

SEC has been taking actions against ICOs that it deems are operating outside the boundaries of its rules and regulations for some time now.

Recently, the SEC settled fine against a Russia-based rating firm, ICO Rating, that failed to close payments it received to publicize the digital asset offerings of issuers it rated.

Although the company neither admitted nor denied the SEC’s charges but agreed to pay a nearly $269,000 fine for the “anti-touting violations” committed between Dec. 2017 and July 2018.

Before that, in November last year, the SEC charged the founder of the crypto trading platform, Zachary Coburn with running an

“unregistered national securities exchange.”

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