SEC Fines Russian ICO Service Over Undisclosed Payments for Reviews
By Jamie Green – Crypto Specialist
It has been reported that the US Securities and Exchange Commission (SEC) has fined ICORating, a Russian analytics firm for not disclosing payments for positive reviews to various projects. This means projects looked to buy cryptocurrency for bribing the site for good feedback.
The SEC had announced a $268,998 settlement with ICORating for projects that were rated between December 2017 to July 2018. The SEC says those projects rated by ICORating had raised funds during that time through certain Initial Coin Offerings (ICOs), that the agency classifies as securities. Due to this, potential investors should have been given proper disclosures when buying crypto native to these blockchains.
ICORating lists several team members from well-known crypto projects such as NEO. Fortunately, none of the company’s members were charged in the settlement.
Associate Director of the SEC's Enforcement Division, Melissa Hoffman said in the following statement:
“The securities laws require promoters, including both people and entities, to disclose compensation they receive for touting. This requirement applies regardless of whether the securities being touted are issued using traditional certificates or on the blockchain.”
Though companies are permitted to sell cryptocurrency via an ICO to raise funds, if they’re classified a security, they will fall under greater regulation and scrutiny.
Any potential investor should always conduct extensive research and due diligence when looking at ratings to fully understand the project before choosing to buy cryptocurrency.
As a result, the ICORating agreed to pay an interest of $106,998 and $162,000 in civil penalties without further commenting on the findings by the SEC. Any practice of bribery is unethical.
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