ICO Project Enigma Settles SEC Charges Over $45M Token Sale

The SEC settled charges with Engima MPC alleging it raised $45 million in an unregistered securities sale with its 2017 ICO. Engima will refund investors and pay a penalty.

AccessTimeIconFeb 19, 2020 at 5:09 p.m. UTC
Updated Sep 13, 2021 at 12:19 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The U.S. Securities and Exchange Commission (SEC) has settled securities law violation charges with Enigma MPC, a blockchain startup that raised $45 million in a 2017 token sale.

The regulator announced Wednesday that under the settlement Enigma will refund "harmed investors" using a claims process, register its tokens as securities with the SEC, file reports to the agency and pay a further $500,000 as a penalty. Enigma sold ENG tokens in 2017, which the SEC said are securities.

Engima did not qualify for an exemption from securities registration requirements, according to the SEC.

According to a blog post, Engima will set up the claims process in the near future.

In a statement sent to CoinDesk, Enigma CEO Guy Zyskind said the settlement "is the culmination of an extended series of discussions with the SEC."

"[It] clears the way for our development team to return its full attention and energy to our original and continued vision: building groundbreaking privacy solutions that improve the adoption and usability of decentralized technologies, for the benefit of all," he said.

The settlement also allows the Engima team to focus on its actual protocol, he said, including the launch of its mainnet last week.

The Enigma mainnet, which launched on Feb. 13, now has more than 20 validators, the company claimed, with the mainnet based on Cosmos SDK and secured by a new coin dubbed "secret," according to its blog post.

Enigma is now looking for "legally compliant avenues" for swapping its ENG token, which is built on ethereum, for its new SCRT token.

"We are continuing discussions with our legal counsel and regulators to identify an effective means of facilitating a swap that complies with all relevant securities regulations. But for the time being, our team is not able to proceed. We appreciate your patience and will update you as things move forward," the blog post said.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.


Read more about