SEC Cracks Down on $30M Crypto ICO Violation
The U.S. Securities and Exchange Commission (SEC) accused a California-based cryptocurrency project of conducting an unregistered initial coin offering (ICO) in 2017, where they managed to raise nearly $30 million.
According to a recent SEC order, the blockchain auditing project known as Quantstamp violated securities laws by selling its QSP token without proper registration with the regulatory agency.
Subsequently, both parties have reached a settlement involving penalties and some funds’ reimbursement to investors.
Quantstamp successfully sold QSP to over 5,000 investors, raising a total of $28.35 million between October and November 2017, as per the SEC’s findings.
The SEC further alleges that Quantstamp ceased the development of the ecosystem’s security auditing protocol in 2019, having already used the majority of the ICO’s proceeds for its development and launch.
The timeline provided by the SEC indicates that the first version of the Protocol was publicly released in March 2018, approximately six months after the ICO. An upgrade followed in September 2018, with the final version being released in June 2019, around 18 months after the ICO.
Quantstamp allocated over $26 million from the ICO proceeds to develop the protocol. After the final release in June 2019, further development on the protocol ceased, and Quantstamp no longer actively supports it.
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The settlement requires Quantstamp to pay a total fine of $3,473,515 to the SEC, comprising $1.9 million in disgorgement, $494,314 in prejudgment interest, and a $1 million civil money penalty.
The disgorgement and prejudgment interest will be distributed to affected investors as far as possible.
In addition to the monetary penalties, Quantstamp agreed to transfer their “large block of QSP tokens” to an appointed fund administrator for permanent destruction or disabling as part of the settlement.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
