Regulators hesitate to make more efforts in pushing cryptocurrency startups to obey the laws after these companies were unable to offer more transparency and repay savers. Numerous firms who agreed to fix previous offenses neglected deadlines.
$40 million was collected out of the raised $5.4 billion from unlawful trades of digital tokens. This incident happened during the booming stage of cryptocurrency in 2017. These companies needed to meet the fundraising rules of the Securities and Exchange Commission or SEC, instead of paying lower penalties. It pushed the pacts as an outline for resolving the same cases.
Two companies didn’t make it on the initial deadline, which was October 16. These two weren’t able to repay clients who purchased their tokens. The third one needed to provide necessary information to investors for refunds. However, it’s over five months behind its target date. These three firms stated on their websites that SEC gave more time for them to do the job.
As per SEC, they didn’t release the said information. Moreover, a spokeswoman disagreed to make a statement.
Paragon Coin Inc. and Airfox approved to pay penalties, which cost $250,000 for each in November 2018. To not be accused of fraud, SEC projected a path for these companies to repay. The main deal was for these startups to provide refunds to stockholders and to bring their primary coin offerings under SEC.
Both Paragon Coin Inc. and Airfox filed the revelations, yet Paragon Coin Inc. didn’t answer to SEC’s letter, which includes follow-up questions. Also, as per SEC data, Paragon Coin Inc. didn’t issue any updates for financiers after the registration of tokens in March.
Gladius Network LLC was the third company that failed to comply with SEC’s deal. This startup didn’t pay a fine after it was settled. Nonetheless, SEC commended the company for self-reporting the violations.
In case investors ask for their money back, not one from these companies can issue compensation. These don’t have sufficient cash.
SEC stated that securities are some of the numerous crypto assets, which makes these the focus to investor-protection regulations. It also shared that it wants to create room for technology-oriented companies to enhance the process of capital-raising. The process is about making it more effective and cheaper for everyone.
The previous SEC enforcement notary named Michael S. Dicke shared how he was doubtful that a lot of crypto platforms will follow the template of SEC. He mentioned that it’s impractical. Moreover, he also said that once the issuer can pay, that’s the time that it’ll only work well.