A California-based blockchain company that raised $25 million in funds via an initial coin offering (ICO) has agreed to return the money to token purchasers and pay a $400,000 fine, the SEC announced.

BitClave PTE Ltd., who must make those payments in accordance with an SEC settlement, introduced a plan in 2017 to sell its Consumer Activity Tokens (CAT) to approximately 9,500 investors in the US and elsewhere. The project altered its business model in the same year to develop and market a blockchain-based search platform for targeted consumer advertising. The ICO was pursued to raise funds necessary to build the service.

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The SEC was careful to note that they had not accused BitClave of fraud, but rather of failing to register their tokens as securities. Notably, the agreement states that BitClave will return funds to harmed investors via an investor compensation fund called a “Fair Fund.”

In other crypto-related settlements, the SEC used different mechanisms to compensate investors who participated in an initial coin offering. Namely, the ICO issuer has either voluntarily returned all proceeds of the token sale or was required to go through a claims process.

Under the settlement, BitClave must pay almost in total $29 million in disgorgement, interest, and civil penalties, which will be turned over to the SEC for eventual distribution to investors harmed by the ICO.

As explained in the order, the agency determined that BitClave amounted to selling securities without filing a registration or qualifying for a registration exemption.

Earlier in February, Hester Peirce, an SEC regulator dubbed “CryptoMom,” has floated the idea of offering a ‘safe harbor’ to ICOs so that some crypto tokens are not treated as securities. Peirce proposed a three-year grace period for cryptocurrency startups to tweak their token-based fundraising models in new directions. As such, crypto tokens meeting specified criteria could be issued more freely before the SEC determine whether they need to comply with the federal securities laws.