A cryptocurrency company that conducted an initial coin offering (ICO) in 2017 has approached the U.S. Securities and Exchange Commission (SEC) after selling security tokens without approval.
Despite the company raising approximately $12.7 million during the ICO, the SEC has chosen not to impose any penalty on the company. This has been credited to the “significant steps Gladius took to remediate the violation”, according to an SEC agent.
Gladius, a Nevada-based company registered as an LLC, aims to provide improved defense against cyber-attacks through a method of renting out spare computer bandwidth. The company took the initiative to report the violation to the SEC itself and ask how it can rectify the situation.
Robert Cohen, Chief of the SEC’s Cyber Unit, commented on how such a move was key in the company avoiding a penalty.
“Today’s case shows the benefit of self-reporting and taking proactive steps to remediate unregistered offerings,” he stated.
The SEC has previously issued fines to several other cryptocurrency companies for violating registration procedures.
The ruling has drawn some criticism from other cryptocurrency companies that are currently dealing with SEC-regulated products. Gabor Gurbacs, Director of Digital Assets at Vaneck, called the move a ‘terrible example’.
“The guy did an unregistered offering. Self-reported it. No penalties. Miraculously got away with it. No-one knows why,” he said.
Vaneck, an investment management firm based in New York, currently has a pending rule change filed with the SEC for their Vaneck/SolidX Bitcoin exchange-traded fund (ETF). Approval for the fund, along with several other Bitcoin ETF’s, has already been delayed a number of times by the regulator.