Crypto startup Gladius Network LLC has settled charges of running an unregistered securities offering with the U.S. Securities and Exchange Commission (SEC), the regulator announced Wednesday.
Gladius Network conducted an initial coin offering (ICO) near the end of 2017, raising $12.7 million in the form of nearly 24,000 ETH. In a press release, the SEC explained that this ICO was not registered under federal securities laws, and the ICO itself did not qualify for an exemption from any registration requirements these laws impose.
Under the settlement, Gladius will return funds to any investors who request a refund and register its tokens as securities under the Securities Exchange Act of 1934. The startup is not admitting to or denying the SEC's findings under the arrangement.
The SEC will not be imposing a penalty as it has in the past, due to the fact that Gladius self-reported its token sale to the regulator, the press release explained.
Gladius "expressed an interest in taking prompt remedial steps," the release added.
In a statement, SEC cyber unit chief Robert Cohen noted that "The SEC has been clear that companies must comply with the securities laws when issuing digital tokens that are securities," adding:
SEC Chairman Jay Clayton at Consensus: Invest 2018, image from CoinDesk archives
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