Gladius Network LLC, a Crypto startup settles the charge filed on its name for running an unregistered securities offering with the U.S. Securities and Exchange Commission (SEC), the regulator announced Wednesday.
Near the end of 2017, the Gladius Network conducted an initial coin offering (ICO) and minced $12.7 million in the form of nearly 24,000 ETH. The SEC explained in a press release, that the said ICO wasn’t registered under federal securities laws and thus did not qualify for an exemption from any registration requirements these laws impose.
The SEC used the phrase “unregistered ICO” in the headline of its announcement, echoing the commission’s chairman, Jay Clayton’s statement that every ICO he’d seen was security.
The settlement dictates that the Gladius will return funds to any investors who request a refund and register its tokens as securities under the Securities Exchange Act of 1934. The startup hasn’t yet admitted or denied the SEC’s findings under the arrangement.
Crypto startups Airfox and Paragon Coin have had previously settled a similar unregistered securities charges, but it did not explicitly use the phrase “unregistered ICO” at the time for either company.
Like in the past, the SEC will not impose a penalty due to the fact that Gladius self-reported its token sale to the regulator, the press release explained. The release further adds that Gladius “expressed an interest in taking prompt remedial steps.”
The SEC cyber unit chief Robert Cohen noted in the statement that:
“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 release further notes that Gladius’ token sale came after its DAO report was released, which found in particular that ICOs can qualify as securities offerings.