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The US Securities and Exchange Commission (SEC) continues its efforts to create a safe environment for all investors – including crypto investors. The SEC sniffed out several ‘illegal’ crypto firms – both large exchanges and startups – involved in selling unregistered securities last year.
This action came into full swing after the commission announced to the general public that virtually all the ICOs and tokens are, in fact, considered securities in the eyes of the securities laws. Therefore, all crypto firms involved in ICOs or selling of tokens should register both the company, the ICO, and tokens as securities with the SEC. Firms were also given the option to file for exemption – especially existing firms.
Nonetheless, several firms disregarded – and some are still disregarding – this announcement and continued with their ‘offerings’.
The case of Gladius Network LLC is somewhat different as the firm reported itself to the SEC. Besides reporting to the SEC, the management of the firm has been ‘helpful’ since the case began. This is according to the press release issued by the SEC on its official website.
The Washington-based crypto firm was built to offer blockchain-oriented solutions to its customers. The firm is focused specifically on creating a platform that helps participants to fight against cyberattacks such as DDOS. According to the release, Gladius conducted an ICO in 2017 – after the SEC announcement – as a means to raise funds for the development of its network. The company sold its token, the GLA token, to willing buyers who paid with ETH. The crypto market was experiencing its best year at the time, and as such, Gladius was able to raise about $12.7 million in digital assets to bolster the growth of its network.
The SEC report has it that the management realized they have been in the wrong and decided to come clean in 2018; the firm reported itself to the enforcement arm of the SEC. It did not stop at that but was eager to take prompt remedial steps to remedy the situation. The SEC found the firm operating illicitly on the account that both the firm and its token aren’t registered under any jurisdiction. However, the commission agreed to ‘go soft’ on Gladius because of the peculiarity of its case, using it as a medium to encourage other illegal firms to come out of hiding.
Notwithstanding, the SEC made it mandatory for Gladius to compensate investors who participated in the ICO. The management was also mandated to register the firm and its token as securities. In addition, the firm will file the requested reports with the Commission as stipulated by the SEC’s order.
The chief of the SEC’s Cyber Unit, Robert A Cohen, reminded the public that the SEC has always been explicit about their stand on ICOs and tokens. He added that this case is just an example of the benefits of self-reporting and taking essential steps to remedy the situation.