The U.S. Securities and Exchange Commission has settled charges against the defunct initial coin offering (ICO) review website Coinschedule.com for violating the anti-touting provisions of federal securities laws.<\/p>\n
But two SEC commissioners have penned an open letter in response saying the settlement highlights flaws with the commission\u2019s processes.<\/p>\n
According to a July 14 release from the securities regulator, Coinschedule failed to disclose it was receiving compensation from digital asset issuers for favorable reviews.<\/p>\n
The settlement\u2019s terms state that Blotics, formerly known as Coinschedule, must pay a penalty of $154,434 plus $43,000 in disgorgement plus interest without admitting or denying the SEC\u2019s findings.<\/p>\n
The website operated between 2016 and 2019, with many of its visitors hailing from the United States. The site provided \u201ctrust scores\u201d for more than 2,500 ICOs, claiming to assess the \u201ccredibility\u201d and \u201coperational risk\u201d of each offering using a \u201cproprietary algorithm.\u201d However, according to the SEC:<\/p>\n
\u201cIn reality, the token issuers paid Coinschedule to profile their token offerings on Coinschedule.com, a fact that Coinschedule failed to disclose to visitors.\u201d\u00a0<\/p><\/blockquote>\n
The SEC emphasizes that Coinschedule continued to publish ICO reviews after it published its 2017 DAO Report \u2014 which warned that ICOs may be securities, and as such, those who promote initial coin offerings must comply with federal securities laws.<\/p>\n
Kristina Littman, Chief of the SEC Enforcement Division\u2019s Cyber Unit, said taking money for favorable coverage of securities was prohibited: \u201cThe securities law prohibiting touting securities for compensation without appropriate disclosures to investors is clear and longstanding.\u201d<\/p>\n