The U.S. Securities and Exchange Commission (SEC) has filed charges against the California-based blockchain firm Quantstamp over an unauthorized initial coin offering (ICO) that raised $28 million in 2017. Following the charge, the company has consented to refund the ICO proceeds:
“Without admitting or denying the SEC’s findings, Quantstamp agreed to a cease-and-desist order and to pay disgorgement of $1,979,201, prejudgment interest of $494,314, and a civil penalty of $1 million.”
The SEC order stipulates that Quantstamp’s ICO, carried out in the final months of 2017, collected over $28 million through the sale of QSP tokens to an estimated 5,000 investors. The firm’s original aim was to use these funds to further its development and marketing endeavors for its automated smart contract security auditing platform.
Notably, the SEC order also reveals that Quantstamp has stopped operations and support for its automated smart contract security auditing platform since June 2019.
The SEC charges that these tokens are securities, and their sale and offering were unregistered, resulting in a breach of federal laws:
“Quantstamp offered and sold the QSP tokens as investment contracts, and therefore securities.”
As part of the settlement with the SEC, Quantstamp has agreed to a cease-and-desist order and is required to pay a total of $3.47 million. This includes $1.98 million in disgorgement, $494,314 in prejudgment interest, and a civil penalty of $1 million.
In addition to this, the SEC’s order mandates the creation of a Fair Fund for reimbursing the aggrieved investors. Quantstamp has agreed to transfer its QSP token holdings to the Fair Fund’s administrator.
These tokens will subsequently be “permanently disabled or destroyed.”
