- Gladius is on the clear as SEC see no need of penalizing the network after running unregistered initial coin offering
- SEC did not charge Gladius Network because they had self-reported
- SEC seeks all platforms to follow US law when issuing digital tokens
This Wednesday, the Securities and Exchange Commission (SEC) announced that Gladius Network LLC, a crypto startup company, has settled its charges for running unregistered initial coin offering.
According to the announcement, Gladius Network conducted the initial coin offering towards the end of 2017, which earned them approximately $12.7 million. SEC stated that the initial coin offering was unregistered under the federal security laws and it was not exempted from any registration by the law.
Gladius Network Self-reported
The company had plans to finance an underway project to create a network that would be used to rent out spare computer bandwidth, defend against cybercrimes as well as enhance data delivery speed.
Having self-reported to SEC in the summer of 2018, Gladius team showed cooperation during the investigation and settlement process. They were set to compensate any investor who will ask for a refund and then register the tokens as securities following the securities exchange act of 1934. The press release stated that Gladius will also be required to prepare periodic reports with the SEC.
No harm no foul
Because they had self-reported, the securities and exchange commission did not see the need to impose a penalty. This comes after two similar cases of registration laws violations where the companies did indeed pay penalties.
When the SEC was dealing with the two previous cases of unregistered security charges they did not use the phrase ‘unregistered initial coin offering’ as was the case with Gladius Network.
The SEC has made it clear that all companies must follow the securities laws when issuing digital tokens. Chief of the Securities and Exchange Commission’s cyber unit, Robert A Cohen said that the case with Gladius shows us the benefit of self-reporting and taking proactive steps to remedy the situation:
“Today’s case shows the benefit of self-reporting and taking proactive steps to remediate unregistered offerings.”
Mr. Cohen supervised the investigation that was conducted by Marc E. Johnson of the Enforcement Division’s Cyber Unit and Laura K. D’Allaird.
A few weeks back, SEC commissioner Hester Peirce, admitted that the crypto industry is bound to receive a stern resistance from regulators especially since it is in the financial sector. The SEC has always been known to be strict in crypto amenities, but this new twist with the Gladius matter comes as shocker mostly because the board hasn’t imposed any penalties on the network for not following the rules.