BitClave PTE Ltd. agreed to settle the charges filed by the Securities and Exchange Commission (SEC), alleging that the blockchain services company conducted an unregistered initial coin offering (ICO).
The blockchain services company sold its Consumer Activity Tokens (CAT) to approximately 9,500 investors during its ICO from June to November 2017. It raised more than $25 million from investors including those in the United States during the relevant period, according to the Commission.
The SEC found out that BitClave conducted its ICO without registering CAT, which constituted securities. BitClave planned to use the proceeds from its ICO to develop, administer, and market a blockchain-based search platform for targeted consumer advertising.
Since the Commission’s findings, the blockchain services company removed CAT from third-party trading platforms. It is also winding down its operations and does not to continue developing or supporting the platform for its digital token.
SEC order against BitClave
As part of the settlement, the SEC ordered BitClave to disgorge $25.5 million it raised during the ICO; to pay prejudgment interest of $3,444,197 and a penalty of $400,000.
The SEC order also included creating a Fair Fund to distribute the monies paid by BitClave to investors harmed by its unregistered ICO.
Additionally, the Commission ordered the blockchain services company to transfer all remaining CAT in its control to the fund administrator for permanent disabling; publish notice of the SEC order, and request the removal of CAT from all digital asset trading platforms.
In a statement, SEC Enforcement Division’s Cyber Unit Chief Kristina Littman said, “Issuers of securities, traditional or digital, must comply with the registration requirements of the federal securities laws. The remedies ordered by the Commission will provide meaningful relief to investors in this unregistered offering.”