The US Securities and Exchange Commission (SEC) has ordered cryptocurrency firm BitClave to return $ 25.5 million to investors.
In a May 28 statement, the SEC announced charges against the California-based crypto startup. The regulator found that BitClave was responsible for selling unregistered securities in its initial coin offering. The head of the SEC’s cyber enforcement division, Christina Litman, commented;
“Issuers of securities, traditional or digital, must comply with the requirements for registration of federal securities laws. […] The refunds ordered by the Commission will provide significant relief to investors in this unregistered proposal. “
The SEC said, “BitClave has agreed to settle the accounts by repaying the proceeds from the offer and paying additional cash benefits to be distributed to investors through a fair fund.”
The firm agreed to pay $ 25,500,000, interest on prejudice of $ 3,444,197 and a penalty of $ 400,000 without acknowledging or denying the regulator’s findings.
In October 2017, BitClave announced plans to compensate Internet users for their data that could be used to target ads.
The company also claims that its system can reduce the cost of online advertising by eliminating intermediaries.
BitClave reached $ 25.5 million in its ICO in just 32 seconds at the end of November 2017.
BitClave has created an expectation for the appreciation of coins
The SEC has now concluded that the money raised by BitClave through the sale of its own Consumer Activity Tokens (CAT) to about 9,500 investors – including some in the United States – is an unregistered offer of securities.
The regulator claims that the company’s advertising materials have made investors expect to accept the token thanks to the work done by BitClave:
“BitClave plans to use the proceeds from ICO to develop, administer and market a blockchain platform for targeted consumer advertising. BitClave emphasized its expectation that the coins would increase, and took steps to make them available for trading on third-party digital asset trading platforms after the ICO. “
The SEC has published a framework to help market participants determine whether a digital asset is a security in April 2019. According to these guidelines, when an asset is expected to be accepted through work done by others, then it can reasonably be expected that this will be a valuable book.
BitClave has also agreed to request the removal of CAT coins from cryptocurrencies. According to CoinMarketCap, since the news, the company’s tokens have risen by more than 23% within 24 hours and are currently registered only on the cryptocurrency exchange YoBit. All tokens remaining under the control of the company will be transferred to the administrator of the fund for permanent deactivation.