The United States Security and Exchange Commission (SEC) has ordered a start-up, BitClave, to return up to $25.5 million to its investors.
In a press release posted on May 28, the Commission charged BitClave with leading an unlawful initial coin offering (ICO) in the United States.
The SEC revealed that BitClave raised $25.5 million from about 9,500 investors through its 2017 ICO. “BitClave planned to use the ICO proceeds to develop, administer, and market a blockchain-based search platform for targeted consumer advertising,” the SEC added.
The start-up has agreed to return all proceeds from the ICO to its investors. It will do so through a Fair Fund created by SEC, for close monitoring.
BitClave maintains that it will not admit nor deny SEC’s claims. In its attempt to preserve innocence, however, BitClave settled to pay a disgorgement fee of $25.5 million, $3,444,197 for prejudgment interest, and an additional $400,000 for the penalty.
Before its ICO in November 2017, the firm announced that it was willing to pay internet users for permission to use their information in targeted ads. With this strategy, BitClave was able to raise $25.5 million within seconds of its ICO.
Its ICO offered Consumer Activity Tokens (CAT). The SEC deduced that “BitClave failed to register their offers and sales of CAT, which constituted securities.”
The SEC has previously clamped down on other token sales.