US SEC Escalates Measures Against Unregistered Ethereum ICOs


SEC has settled its charges against two ICOs that succeeded in raising up to $27 million. They did so by selling unregistered securities tokens and also used the Ethereum blockchain.

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A Boston company, CarrierEQ, which was behind an ICO for Airfox worth $15 million. This project was meant to bring mobile banking to the emerging markets. CarrierEQ has agreed to pay the $250,000 penalty. The company will also return the funds raised during the exercise.

In the same vein, Paragon, an online startup has agreed to pay the penalty sum of $250,000 penalty. The company will also be returning the proceeds of the ICO from selling tokens. The tokens were sold on the Ethereum Blockchain and was made to build a platform to promote the sale of legal marijuana.

Both companies refused to admit or deny the allegations. But they did agree to pay the penalty.

SEC is getting more involved

This news comes after a week since the SEC’s first settlement with a crypto exchange. These charges show that the regulator has become more involved with the happenings in the crypto space.

Stephanie Avakian, the co-director of the enforcement division, said in a statement,

“We have made it clear that companies that issue securities through ICOs are required to comply with existing statutes and rules governing the registration of securitiesThese cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets.”

The companies are also expected to register the tokens as securities pursuant to the 1934 Securities Exchange. They must also file periodic reports to the SEC for one year.

EtherDelta settlement

Last week, SEC made a landmark settlement, the first of its kind. It reached an agreement with EtherDelta founder. The firm ran a decentralized operation, which relied on a self-executing code rather than using traditional central management. SEC fined the crypto exchange’s founder almost $400,000. This fine was the total of the penalty sum as part of its investigation.

The ICO cases of today come one year after the first non-fraud ICO registration case of the SEC. It involved Munchee, a project that allowed users of iPhone to review restaurants with their mobile devices. The SEC took a different path in that case. No sanction was imposed on the company. The company ceased operations before delivering tokens and returned all proceeds to the investors.

The charges against Paragon and Carrier EQ come at a rough time for the crypto market. Sadly, this market has taken a huge hit in the past couple of days. The total market cap has dropped from $212 billion to $183 billion. This came before the Bitcoin Cash hard fork when investors started selling off.

From time, regulatory decisions such as these have had some influence on bitcoin price as well as the price of other altcoins. There is no way to predict if these developments will impact the market prices.


Princess Ogono is a writer, lawyer and fitness enthusiast. She believes cryptocurrencies are the future. When she's not writing, she spends time with her adorable cat, Ginger and works out often.


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