SEC Orders Tierion to Refund Investors of $25 Million ICO
- The project was fined $250,000 for securities law violations.
The US Securities and Exchange Commission (SEC) has busted yet another Initial Coin Offering (ICO) Initial Coin Offering (ICO) An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Accompanying most major ICOs has been the prevalence of a whitepaper. A whitepaper serves as both a persuasive sales pitch, and in-depth report on a specific topic that presents a problem and provides a solution. Most marketers relied on whitepapers to educate their respective audience about a particular issue, or explain and promote a particular methodology that an ICO could potentially solve. The information enclosed in whitepapers have historically been met with skepticism.Why ICOs Have Fallen Out of FavorThis is due in large part to the early days of ICOs, as this practice was highly unregulated and extremely risky. Because there were no regulations delineating who could and could not hold an ICO, many bad actors or incompetent technologists saw the practice as an opportunity to grab a lot of fast cash.As a result, many investors have lost quite a lot of money – their tokens were either never returned to them, or the companies who issued the tokens failed within several months of the token’s official launch.Regulators around the world have cracked down on the practice, which has resulted in a slightly “cleaner” ICO space.However, ICOs have garnered a pretty bad reputation and are still regarded as generally untrustworthy. As such, other methods of fundraising, such as Initial Exchange Offerings (IEOs) and Security Token Offerings (STOs) have been born. An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Accompanying most major ICOs has been the prevalence of a whitepaper. A whitepaper serves as both a persuasive sales pitch, and in-depth report on a specific topic that presents a problem and provides a solution. Most marketers relied on whitepapers to educate their respective audience about a particular issue, or explain and promote a particular methodology that an ICO could potentially solve. The information enclosed in whitepapers have historically been met with skepticism.Why ICOs Have Fallen Out of FavorThis is due in large part to the early days of ICOs, as this practice was highly unregulated and extremely risky. Because there were no regulations delineating who could and could not hold an ICO, many bad actors or incompetent technologists saw the practice as an opportunity to grab a lot of fast cash.As a result, many investors have lost quite a lot of money – their tokens were either never returned to them, or the companies who issued the tokens failed within several months of the token’s official launch.Regulators around the world have cracked down on the practice, which has resulted in a slightly “cleaner” ICO space.However, ICOs have garnered a pretty bad reputation and are still regarded as generally untrustworthy. As such, other methods of fundraising, such as Initial Exchange Offerings (IEOs) and Security Token Offerings (STOs) have been born. Read this Term), this time Tierion for issuing TNT tokens, for violations of securities law.
Additionally, the company was fined $250,000 and have to disable trading of its tokens on the secondary market.
The SEC alleges that the TNT tokens fall under the category of securities, and Tierion did not register them with the regulator.
“While Tierion had been in business as a SaaS company since 2015, the Tierion Network was still in development at the time of the Token Sale. Reasonable investors would have understood that their money was funding the Tierion Network’s continued development,” the SEC noted.
The ICO investors and TNT holders have 60 days to approach the company for a refund on their investments at cost, with an interest. The node operators are allowed to sell their TNT holdings, received as compensations, back to Tierion for .01 cent plus interest.
It is to be noted that though the company agreed to the settlement with the regulator, it did not agree or deny any allegations.
The Project Will Continue
In a Medium post, Wayne Vaughan, Founder and CEO of Tierion, said that the project will go ahead despite the SEC’s order.
“This SEC settlement and waiver allows Tierion to complete the retirement of the TNT token, and to move forward without a heavy regulatory burden. This announcement does not impact the availability of Tierion’s current products or open-source software,” Vaughan noted.
Furthermore, the SEC is going after ICO mammoths with similar allegations of securities law violations. After successfully stopping Telegram and Kik for their blockchain initiatives, the watchdog has now sued Ripple for illegally raising $1.3 billion.
The US Securities and Exchange Commission (SEC) has busted yet another Initial Coin Offering (ICO) Initial Coin Offering (ICO) An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Accompanying most major ICOs has been the prevalence of a whitepaper. A whitepaper serves as both a persuasive sales pitch, and in-depth report on a specific topic that presents a problem and provides a solution. Most marketers relied on whitepapers to educate their respective audience about a particular issue, or explain and promote a particular methodology that an ICO could potentially solve. The information enclosed in whitepapers have historically been met with skepticism.Why ICOs Have Fallen Out of FavorThis is due in large part to the early days of ICOs, as this practice was highly unregulated and extremely risky. Because there were no regulations delineating who could and could not hold an ICO, many bad actors or incompetent technologists saw the practice as an opportunity to grab a lot of fast cash.As a result, many investors have lost quite a lot of money – their tokens were either never returned to them, or the companies who issued the tokens failed within several months of the token’s official launch.Regulators around the world have cracked down on the practice, which has resulted in a slightly “cleaner” ICO space.However, ICOs have garnered a pretty bad reputation and are still regarded as generally untrustworthy. As such, other methods of fundraising, such as Initial Exchange Offerings (IEOs) and Security Token Offerings (STOs) have been born. An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Accompanying most major ICOs has been the prevalence of a whitepaper. A whitepaper serves as both a persuasive sales pitch, and in-depth report on a specific topic that presents a problem and provides a solution. Most marketers relied on whitepapers to educate their respective audience about a particular issue, or explain and promote a particular methodology that an ICO could potentially solve. The information enclosed in whitepapers have historically been met with skepticism.Why ICOs Have Fallen Out of FavorThis is due in large part to the early days of ICOs, as this practice was highly unregulated and extremely risky. Because there were no regulations delineating who could and could not hold an ICO, many bad actors or incompetent technologists saw the practice as an opportunity to grab a lot of fast cash.As a result, many investors have lost quite a lot of money – their tokens were either never returned to them, or the companies who issued the tokens failed within several months of the token’s official launch.Regulators around the world have cracked down on the practice, which has resulted in a slightly “cleaner” ICO space.However, ICOs have garnered a pretty bad reputation and are still regarded as generally untrustworthy. As such, other methods of fundraising, such as Initial Exchange Offerings (IEOs) and Security Token Offerings (STOs) have been born. Read this Term), this time Tierion for issuing TNT tokens, for violations of securities law.
Additionally, the company was fined $250,000 and have to disable trading of its tokens on the secondary market.
The SEC alleges that the TNT tokens fall under the category of securities, and Tierion did not register them with the regulator.
“While Tierion had been in business as a SaaS company since 2015, the Tierion Network was still in development at the time of the Token Sale. Reasonable investors would have understood that their money was funding the Tierion Network’s continued development,” the SEC noted.
The ICO investors and TNT holders have 60 days to approach the company for a refund on their investments at cost, with an interest. The node operators are allowed to sell their TNT holdings, received as compensations, back to Tierion for .01 cent plus interest.
It is to be noted that though the company agreed to the settlement with the regulator, it did not agree or deny any allegations.
The Project Will Continue
In a Medium post, Wayne Vaughan, Founder and CEO of Tierion, said that the project will go ahead despite the SEC’s order.
“This SEC settlement and waiver allows Tierion to complete the retirement of the TNT token, and to move forward without a heavy regulatory burden. This announcement does not impact the availability of Tierion’s current products or open-source software,” Vaughan noted.
Furthermore, the SEC is going after ICO mammoths with similar allegations of securities law violations. After successfully stopping Telegram and Kik for their blockchain initiatives, the watchdog has now sued Ripple for illegally raising $1.3 billion.