Two years on from the 2017 ICO craze and some crypto projects are calling it quits despite escaping harsh sanctions from regulators. Some commentators say authorities may be forced to adopt harsher punishments for illegal token sales since indicted projects cannot be trusted to pay back investors.
Gladius Calls it Quits
According to the Wall Street Journal (WSJ), Gladius — a blockchain-based internet security startup, has shut up shop despite raising more than $12 million during its 2017 ICO. The company even escaped a heavy fine from the U.S. Securities and Exchange Commission (SEC) for selling unlicensed securities.
Despite escaping a heavy fine, the Gladius hierarchy says it no longer has enough funds to continue running the business. Speaking to WSJ, George Mastoris, an attorney for the company say Gladius failed to attract new investors to save the business.
For the SEC, Gladius’ predicament further exemplifies the Commission’s stance against unlicensed crypto token sales. The SEC had originally ordered the company to file disclosures as part of the settlement.
With the company going under, it appears such disclosures will not be filed. Also, there is the matter of the over 1,700 investors who participated in the 2017 token sale.
As previously reported by Bitcoinist, the ICO market is all but dead with token sales down by more than 95% in 2019. The 2018 crypto bear market and the litany of indictments and fines levied against ICO projects appear to have cooled down interest in token sales.
ICOs Missing Repayment Deadlines May Force SEC’s Hand
Gladius isn’t alone in failing to comply with SEC demands to file disclosures or pay back investors. Projects like Airfox have also failed to meet up with the terms of their settlement deals with the SEC.
Such a situation might see the Commission electing to levy even heavier fines against indicted ICO projects. So far, the SEC has been content with a slap on the wrist of these projects as previously reported by Bitcoinist.
However, with the financial health of several of these blockchain startups, hefty fees may not amount to much.
Meanwhile, some commentators have pointed out that startups that elect to follow regulated channels for their token sales end up incurring a heftier financial burden than their unregulated counterparts.
For instance, Blockstack paid $2 million for its regulated token sale which raised about $23 million. However, the SEC fined Block.one $24 million for its $4 billion ICO.
Should the SEC pursue heftier fines to illegal crypto ICOs? Let us know in the comments below.
Image via Bitcoinist Media Library
The post SEC May Come Down Harder on Illegal Crypto ICOs appeared first on Bitcoinist.com.
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