Blockchain firm BitClave is being forced to refund all the money it earned three years ago through an initial coin offering (ICO) thanks to a settlement with the Securities and Exchange Commission (SEC).
BitClave: Not the First, Not the Last
The SEC has been coming down hard on blockchain and crypto companies that allegedly fail to register their tokens as securities. Since 2017, the governing body has sought to bring all companies that do not properly register their currencies to justice and invoke penalties by enforcing refunds of gathered monies and implementing financial penalties on the “offending” companies.
Some of the biggest examples that come to mind include Paragon Coin and Airfox, both of which were made to pay as much as $250,000 each to the SEC after settling with the organization following accusations that they had not gone through the proper registration protocols.
BitClave is now joining the ranks of these companies and more. The SEC alleges that the company sold what were known as Consumer Activity Tokens (CAT) back in 2017 without going through SEC’s registration process. BitClave has settled with the organization and has agreed to pay back the $25 million it earned through the token sale. In addition, all participants who took part in the sale will be entitled to additional financial relief through what will be known as the “Fair Fund.”
The sale took place between June and November of 2017. During that time, the company sold as many as 60 million CAT units to 1,000 buyers during the first portion of the sale. By the time the final phase of the offering had arrived, the price of the currency had jumped from about 2.5 cents to ten cents. Another 611 million CAT units were then sold to nearly 9,000 separate investors, making BitClave’s token offering one of the most successful in crypto history.
Sadly, it didn’t take long for the SEC to reign in on BitClave’s parade and begin pointing the finger. The organization claims that BitClave used the money it earned to “develop, administer and market a blockchain-based search platform” that would target consumers with varying advertisements. It also says that company executives believed the coin would explode in value. Thus, they worked to ensure third-party trading once the ICO was complete.
However, at the time of writing, CAT has been taken off many of the globe’s crypto trading platforms, and BitClave has stated that it will no longer support or push the CAT blockchain and that it is simplifying its operations.
Winding Things Down
BitClave later issued a statement, explaining:
We are pleased to resolve this regulatory matter with the SEC. We are grateful to have had support from a team and a community passionate about data privacy and finding ways to enable consumers to control when and how they share data.