Initial Coin Offerings

The SEC orders a cryptocurrency startup to refund investors who participated in its ICO

The United States Securities and Exchange Commission (SEC) has directed a cryptocurrency startup to refund investors who participated in its initial coin offering (ICO).

In a press release, the SEC pointed out that the cryptocurrency startup, Gladius Network LLC, was selling unregistered securities to investors. However, the cryptocurrency startup will only be required to refund investors who explicitly request to be refunded.

The cryptocurrency startup conducted the said initial coin offering towards the end of 2017 and managed to accumulate a total of 24,000 Ethereum Coins valued at approximately 12.7 million U.S dollars. The SEC continued to note that Gladius Network continued to conduct an initial coin offering even after the regulator warned that ICOs are securities and need to be registered.

According to the press release:

Gladius self-reported to the SEC’s Enforcement staff in the summer of 2018, expressed an interest in taking prompt remedial steps and cooperated with the investigations. The SEC did not impose a penalty because the company self-reported the conduct, agreed to compensate investors, and will register the tokens as a class of securities.

The SEC’s Chief of the Cyber Unit, Robert A Cohen, stressed that digital tokens that have the characteristics of securities need to be registered. Cohen added that the self-reporting steps taken by the cryptocurrency startup are the starting point for those who have sold similar securities to “remediate unregistered offerings.”

Apart from refunding investors and registering the tokens as securities, the cryptocurrency startup will be required to periodically file reports with the SEC. Although the cryptocurrency startup agreed to the order, it neither agreed nor disputed the SEC’s findings.

Do you think the SEC was fair by not slapping the cryptocurrency startup with a fine on the basis it self-reported the conduct?

Let us know your thoughts in the comments section below.


Philip is an experienced blogger keen on staying updated with trends and news surrounding the blockchain and Bitcoin space. With several years of freelance experience in various industries, Philip brings his knowledge and experience into the crypto space.

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