Analyst ICO Rating fined by U.S. SEC for violating anti-touting regulations

ICO Rating, an analysis firm from Russia, has been charged by the U.S. Securities and Exchange Commission (SEC) and is facing a fine of around $260,000.

According to an announcement, the SEC alleges that ICO Rating violated Section 17 of the 1933 Securities Act, the Anti-touting provision, by failing to disclose the total amount received by issuers of ICO projects whose ratings and evaluations were published on its platform.

Section 17 of the U.S. Securities Act: Whoever acquires a security has the right to sue those who make false or material omissions in statements, giving the plaintiff the right to sue without the burden of proof against issuers, but with the burden of proof against other defendants (such as accountants, lawyers, engineers, appraisers, etc.).

The SEC believes that these rated ICO projects fall within the scope of securities, and therefore ICO Rating did not adequately disclose information to potential investors. Melissa Hodgman, Associate Director of the SEC's Enforcement Division, stated:

This securities law requirement applies to individuals or entities promoting investments, who must disclose the rewards they receive for promoting investments so that potential investors are aware they are viewing a "paid" promotional project. This requirement applies regardless of whether the securities being hyped are issued using traditional certificates or on the blockchain.

ICO Rating, without admitting or denying the findings of the investigation, ostensibly agreed to cease and desist from violating these provisions in the future and to pay a judgment of $106,998 plus interest and a civil penalty of $162,000.

Earlier in August, the SEC also reached a settlement of up to $7 million with the owner of the ICO issuer PlexCorps, Dominique Lacroix, due to suspicions of fraud in the ICO project.

Regulatory agencies are clearly entering this market, and fraud cannot be tolerated. However, on the flip side, once regulation intervenes, it may disrupt the original concept of blockchain. It's a double-edged sword, so let's continue to observe objectively.

Further Reading

• Expert Opinion: The Real Benefits of Blockchain Are Here, and We're Overlooking Them
• Vitalik Buterin: Ethereum's Scalability Is the Biggest Barrier to Institutional Adoption

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