Russia-based Initial Coin Offering (ICO) rating website, ICO Rating, has settled charges brought against it by the United States Securities and Exchanges Commission (SEC).
According to an August 20 press release by the regulator, ICO Rating violated a section of the U.S Securities law, which requires that promoters who receive payment for touting certain investment products disclose the payment to the public.
To this respect, the SEC said that between 2017 and 2018, the accused company collected money from token issuers to review their projects and after that presented them as a suitable investment opportunity for users who dominantly were potential investors.
The SEC also mentioned that some of the tokens which ICO Rating promoted as good investments for the public were securities under U.S laws. Further, by collecting payment to list specific projects, the startup didn't live up to its claim to be 'a rating agency that issues independent analytical research to help the market achieve the necessary standards of quality, transparency, and reliability.'
SEC Enforcement Division Official, Melissa Hodgman, while commenting on the development reminded crypto industry participants that the law requiring that promoters disclose funds received does not exclude the emerging asset class.
“This [disclosure] requirement applies regardless of whether the securities being touted are issued using traditional certificates or on the blockchain,” the official said.
Penalty for ICO Rating
Without accepting or denying the allegations, the startup agreed to settle charges brought against it by the SEC.
That will, according to the press release require that the pay the SEC a disgorgement and prejudgment interest of $106,998, and a civil penalty of $162,000 (total $268,998).
The startup also agreed to cease from any future violation of the securities law.
In a similar development, Stmarket.co reported that the SEC is also looking to settle charges with the founder of the Veritaseum ICO project, Reggie Middleton.
While the regulator has obtained a court order to freeze $8 million worth of assets belonging to the founder and his company, the accused suggested in its legal response yesterday that they did not violate any law.