The settlements that a couple of Initial Coin Offering (ICO) projects reached with the United States Securities and Exchange Commission have come to nothing as they were unable to meet deadlines for the repayments to investors. The third ICO also failed to meet the deadline for the registration of its tokens as securities as reported by the Wall Street Journal.
After blockchain ventures Paragon and Airfox were dragged to court by the SEC because of unregistered ICOs in the last quarter of 2018, both decided to reach an agreement with the regulator. The deal was to involve the compensation of token investors, payment of $250,000 as penalty charges, registration of the tokens as securities and other things.
The deal with SEC was not adhered to as the two entities did not meet the initial deadline set for last month for the repayment to investors. For Airfox, it has to repay all investors on or before the 28th of December. As for Paragon, it has released a notice claiming that investors have until the 21st of November for the submission of their claims for refunds.
The third venture that also reached a deal with the SEC is Gladius. It entered into an agreement with the regulatory body in early 2019. The deal included the filing of Gladius with the SEC for registration of its tokens as securities by the 20th of May. But it failed to meet the deadline. It has released a notice on its website that it has been given until the 18th of November to have all the tokens registered as securities.
The issue on the ground now is that these enterprises most likely will not be able to come up with the necessary funds should all the investors want their refunds at the same time. This is based on available records. Based on a filing with the SEC in September, all Airfox had in both assets by the end of 31st December 2018 stood at only $6.6 million and it was able to generate $15 million in cryptocurrencies from the Initial Coin Offer.
As for Paragon, it was able to raise the sum of $12 million. Its total current assets stood at less than $100,000 by the end of 2018. What all these point to is that there are significant challenges of liquidity with these ventures. If the investors should enter a panic mode and demand for immediate repayments, it is going to spell doom for Airfox and Paragon. As for Gladius, it is still uncertain whether it is going to be able to meet the new deadline for the registration of its tokens as securities.
The SEC remains focused on ensuring that these entities meet their obligations to all the investors. They all entered a deal in the first place after the charges by the SEC. The main reasons for the deal included repayment to the investors and allowing for maximum transparency. The SEC was lenient in agreeing to reduce the fines if the ventures would be more transparent. But it is apparent they are finding it difficult to keep to their side of the bargain.
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