The US SEC has pressed charges against ICOBox for conducting an illegal securities offering and acting as an unregistered broker. The agency unveiled this news via a press release on September 18. Per the publication, the SEC is also suing the platform’s founder, Nikolay Evdokimov for the same crimes.
According to the press release, the defendants sold the platform’s tokens to over 2,000 investors. This offering saw the platform raise $14.6 million in the past two years. Per the SEC, this token sale was unregistered. The watchdog went on to say that ICOBox and Evdokimov promised that the value of the ICO token would increase after trading.
Also, the defendants claimed that investors would be able to change their tokens for other tokens on the platform at a discount. The SEC, however, believes that these were false promises as the ICO tokens are nearly worthless now.
Defendants Raised $650 Through Brokerage Services
SEC’s complaint notes that ICOBox did not register as a broker. However, the firm went on to act as one by facilitating ICOs that raised more than $650 for a lot of clients.
Michele Wein Layne, the regional director of SEC’s Los Angeles Regional office said the defendants ignored the registration requirements. As a result, they exposed investors to nearly worthless investments. On top of this, Layne noted that the defendants did not provide key information that would have helped investors make informed decisions.
The SEC noted that its complaint charges the defendants with going against the registration requirements of federals securities laws. To this end, the agency is seeking injunctive relief, disgorgement with prejudgment interest and civil money penalties.
This news comes after Blockstack PBC became the first firm to win SEC’s approval for running a token sale. According to a report on July 10, the SEC allowed Blockstack to run a $28 million public token offering. The agency let this firm run its offering under Regulation A+. While other firms had used Regulation A+ funding before, Blockstack marked the first time that investors got tokens instead of shares in the firm. The firm claimed to have spent 10 months and more than $2 million to gain SEC’s approval.
Following this approval, Blockstack started its token sale on July 11 and completed it on September 9. During this period, the firm revealed that it managed to raise $23 million. The firm also disclosed that this token sale comprised its SEC-approved offering and its offering to non-US investors.
The firm unveiled that more than 4,500 US firms and individuals took part in its token offering. Investors in this offering included Spartan Group and Lux Capital among other leading VC firms.
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