Settlements of SEC Registration Charges with Two ICO Issuers Serve as Warning and Compliance Models

  On November 16, the Securities Exchange Commission (“SEC“) announced settled charges against two companies that sold digital tokens in initial coin offerings (“ICOs“). According to the Press Release announcing these settlements, these are the Commission’s first cases imposing civil penalties solely for ICO securities offering registration violations. The remedies agreed to include the return of funds to harmed investors, the registration of the tokens as securities under the Securities Exchange Act of 1934, the filing of periodic reports with the Commission, and the payment of $ 250,000 as a monetary penalty. According to the SEC’s orders, both CarrierEQ Inc. (“Airfox“) and Paragon Coin Inc. (“Paragon“) conducted ICOs in 2017. Airfox, a Boston-based startup, raised approximately $15 million worth of digital assets to finance its development of a token-denominated “ecosystem” starting with a mobile…

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