on the crypto
BitClave, a Californian startup whose Ethereum-based search engine raised $ 25,5 million in a 2017 token sale, will reimburse its 9.500 investors in an agreement with the U.S. Securities and Exchange Commission (SEC).
SEC accuses BitClave of making an unauthorized ICO sale
The deal with the SEC ended the BitClave court case immediately after it began. SEC prosecutors released their allegations on May 28 along with an order that defined the sale of BitClave's Consumer Activity Token (CAT) as an unregistered initial coin offering (ICO).
BitClave did not admit or deny that it broke the law when it sold CAT in 2017. In return, the "blockchain services company" will return all $ 25,5 million to investors and pay nearly $ 4 million in additional fines and commissions.
The original project
The U.S. news newspaper CoinDesk reported in 2017 that CAT sales were intended to raise awareness in the industry about the alternative offered by the BitClave data-driven search engine, the BitClave Active Search Ecosystem (BASE).
At the time, founder Alex Bessonov described BASE as a transparent combination of retailers and search engines. CAT was the carrot that stimulated the use of BASE, Bessonov explained, but SEC defined CAT as something different: an investment contract.
Total repayment to investors and a $ 4 million fine for BitClave
Last week's SEC order stated that CAT tokens were investment contracts since investors had reasonable expectations that the CAT would grow in value along with BitClave's maturation.
As proof of this, the order mentions what is written in the BitClave white paper: “With the adhesion of multiple service providers, the quantity of CAT required for an equivalent service will gradually decrease, and this corresponds to an increase in the CAT value. "
According to the agreement, BitClave will put 1,32 billion uncirculated CATs in "permanent disablement" mode and ask that exchanges eliminate those on their platforms. CoinMarketCap reported YoBit.net as the only exchange carrying CAT at the time the charges were made.
The site lists the CAT market capitalization at $ 76.753. "Securities issuers, traditional or digital, must comply with the registration requirements of federal securities laws," said SEC security officer Kristina Littman, in a statement. "The measures ordered by the SEC will provide significant relief to investors participating in this unregistered offer."
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