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.
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