SEC charges Quantstamp over unauthorized ICO.
In a clash between blockchain enterprise Quantstamp and the U.S. SEC, the murky legal waters of initial coin offerings and crypto regulations come to the forefront.
![](data:image/svg+xml;utf-8,<svg xmlns="http://www.w3.org/2000/svg" width="720" height="429" />)
Another legal skirmish has unfolded, this time involving the U.S. Securities and Exchange Commission (SEC) and a blockchain security enterprise Quantstamp.
Coming on the heels of the long-anticipated ruling concerning the SEC’s allegations against Ripple, this development reinforces the precarious legal environment surrounding initial coin offerings (ICOs).
Ripple CEO questions SEC’s crypto jurisdiction as Gensler requests more funding
On July 21, the SEC, the regulatory body for securities in the United States, filed charges against Quantstamp for allegedly conducting an unauthorized ICO in 2017.
The company is accused of amassing over $28 million by selling QSP tokens to approximately 5,000 investors. These funds were purportedly meant to foster the creation of an Ethereum (ETH) blockchain protocol designed to automate the security audits of smart contracts.
The SEC accuses Quantstamp of misleading investors by implying an increase in the tokens’ value as a direct consequence of Quantstamp’s successes. Moreover, it alleges that Quantstamp sought to ensure QSP tokens were available for trading on third-party digital asset exchanges after the ICO.
Quantstamp’s assertion that the QSP sales were exempt from registration was swiftly dismissed by the SEC, which stated they did not fulfill any known exemption criteria.
While contesting the charges, Quantstamp resolved to settle, neither acknowledging nor denying the SEC’s findings. The company consented to pay approximately $2.5 million for disgorgement and prejudgment interest, plus a $1 million civil penalty.
9 comments