SEC Orders ICO Startup to Return $25.5M to Investors

The United States Securities and Exchange Commission has ordered cryptocurrency firm BitClave to return $25.5 million to investors.

In a March 28 announcement, the SEC announced charges against the California-based cryptocurrency startup.

The regulator found BitClave to be responsible for selling unregistered securities in its initial coin offering.

"Issuers of securities, traditional or digital, must comply with the registration requirements of the federal securities laws. The remedies ordered by the Commission will provide meaningful relief to investors in this unregistered offering."

The SEC said, "BitClave agreed to settle the charges by returning proceeds from the offering and paying additional monetary relief to be distributed to investors through a Fair Fund.".

In October 2017, BitClave announced its plans to compensate internet users for their data which could be used for advertisement targeting.

BitClave hit its ICO's hard cap of $25.5 million within just 32 seconds at the end of November 2017.Now, the SEC concluded that the money raised by BitClave through the sale of its Consumer Activity Tokens to about 9,500 investors - including some in the U.S. - was an unregistered security offering.

"BitClave planned to use the ICO proceeds to develop, administer, and market a blockchain-based search platform for targeted consumer advertising. BitClave emphasized its expectation that the tokens would increase in value, and took steps to make the tokens available for trading on third-party digital asset trading platforms after the ICO.".

The SEC published a framework to help market participants ascertain whether or not a digital asset is a security in April 2019.

BitClave also agreed to request the removal of CAT tokens from crypto exchanges.