The U.S Securities and Exchange Commission (SEC) has settled charges against U.K company Blotics, the operator of the Coinschedule.com website, for violating the anti-touting provisions of federal securities law.
The U.S SEC announced that the token listing website has been “charged with unlawfully touting digital asset securities.”
According to an SEC release on July 14, Coinschedule.com “violated the anti-touting provisions of the federal securities laws by failing to disclose the compensation it received from issuers of digital asset securities it profiled.”
Coinschedule.com is a popular website that profiled the initial coin offering of digital asset securities. According to the SEC, Coinschedule.com was accessible in the U.S from 2016 to August 2019. Majority of its traffic comprised U.S visitors. It was secretly receiving compensation from the issuers of the digital assets it was profiling.
The Coinschedule presented details of each initial coin offerings (ICOs) profiled, including links to token issuers’ websites and “trust score.” Coinschedule claimed its evaluation of “credibility” and “operational risk” for each digital token offering was based on a proprietary algorithm.
SEC further said that the Coinschedule published many ICOs after SEC issued its DAO Report in 2017. The report warned that tokens sold in ICO might be securities, and issuers should comply with the Federal securities laws. At the same time, SEC’s Division of Enforcement and Division of Examinations also issued advice that a platform promoting “a virtual token or coin that is a security must disclose the nature, scope, and amount of compensation received in exchange for the promotions.”
Krishna Littman, Chief of the SEC Enforcement Division Cyber Unit, explained that “As the SEC’s order finds, Coinschedule presented potential investors with seemingly independent profiles about token offerings when in fact they were bought and paid for by token issuers.” She emphasized, “The securities law prohibiting touting securities for compensation without appropriate disclosures to investors is clear and longstanding.”
Without admitting or denying the SEC’s findings, Blotics has agreed for the settlement. It includes $43,000 in disgorgement, plus prejudgement interest, and a penalty of $154,434. It also includes an agreement to stop violating the anti-touting provisions of the federal securities laws in future.
