SEC Settle ‘Security’ Charges With Gladius Network After Self-Report

Wilfred Michael 

Wilfred Michael

News reporter

20 February 2019,
21:12
SEC Settle ‘Security’ Charges With Gladius Network After Self-Report

The United States Securities and Exchanges Commission (SEC) said in a Wednesday press release that it had settled charges with crypto startup Gladius Network after the company reported itself with the regulators.

Gladius Network which reportedly raised $12.7 million during its initial coin offering (ICO) for a cybersecurity network in 2017 told the SEC last summer that it had failed to comply with earlier directives to register the tokens as “security.”

The SEC release also acknowledged that Gladius’s offering did not “qualify for an exemption from registration requirements” specified by the law. However, the regulators have tampered justice with mercy since Gladius reported their offense with the SEC instead of waiting to be called.

For that reason, The SEC did not impose a penalty on the crypto startup after carrying out investigations. Additionally, the project agreed to compensate investors who want a refund and also to register the tokens as a class of securities with the SEC.

As a way of commending the move, Robert A. Cohen, Chief of the SEC’s Cyber Unit said the regulators would likely not impose any penalty if non-compliant projects were to report themselves soon.

In his exact words, Cohen outlined that the move by Gladius Network “shows the benefit of self-reporting and taking proactive steps to remediate unregistered offerings.”

Understandably, the case with Gladius has come a little too easy for the SEC who currently face a possible lawsuit with KIK, another crypto startup which they alleged to have sold unregistered security in a 2017 ICO.

As we reported, KIK has refused to accept the allegations by the SEC, a situation that could result in a court case in the coming months.

Meanwhile, the SEC had already imposed several enforcement actions against most crypto projects that raised funds through an ICO in 2017. Also, the regulators fined CoinAlpha Advisors and EtherDelta’s founder, Zachary Coburn for selling unregistered securities.

 

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