ICO rating website called ICOrating.com has come under the radar of the US securities and exchange commission (SEC) for failing to divulge the actual revenue generated from paid ICO reviews.
SEC’s rigorous clampdown on ICO’s has generated a feeling of perturbation among the crypto community as the US regulators are in no mood to cut them slack when it comes to breach of their anti-touting policy.
Without accepting or denying SEC’s charges of covertly recompensing for touting projects it rated, the Russian rating agency has agreed to a massive fine amount of over two hundred and sixty thousand dollars ($268,998).
What is the charge against the ICO rating website?
According to the SEC, the rating agency charged the entities a compensation for rating and publishing research reports on the ICO projects offered on their website and to advertise these reports on various social media channels.
Apparently, the cryptocurrency research firm illicitly gathered around one hundred thousand dollars ($100,572) in revenue from December 2017 to July 2018 through touting issuer-paid listings, with most of them being financial securities.
Besides allegedly covering up the proceeds generated by promotion of ICOs, SEC affirms that the website breaches the anti-touting policy.
Per the securities law, any portal, entity or person involved in endorsing the sale necessitates full disclosure of the remuneration they receive so that the investors are fully aware of what is sponsored and what is not.
Potential implications on ICO projects
Meanwhile, the recent crackdown jeopardizes several ICO projects as over one thousand seven hundred investment contracts were during the 2017-18 crypto fever.
Many speculate that while hundreds of projects may never see the light of day, the remaining may struggle to put together amount for fines and legal fees. A perfect instance for such collapses is the Australian blockchain-based platform for voting, Horizon State, which failed to resurrect after a lawsuit brought against it.
A more recent and second example of this is the case of blockchain firm Veritaseum, who are still battling with SEC for unjustly freezing their assets. According to its founder, the SEC have no grounds to establish that Reggie Middleton has any involvement in dissipation of Veritaseum’s assets.
At the end of the day, SEC may be successful in clampdown of several ICOs, however, the grey areas in the cryptocurrency regulatory framework do offer a chance for survival.