Blockchain Firm BitClave Agrees To Pay Almost $30 Million Following SEC Charges

Blockchain-based company BitClave PTE Ltd. reached an agreement to settle all charges brought by the US Securities and Exchange Commission (SEC) and will pay back all of its 9,500 investors the $25.5 million raised in 2017.

BitClave To Pay Back Investors

The SEC accused the “blockchain services company” that it conducted an unregistered initial coin offering (ICO) of digital asset securities in 2017. BitClave raised $25.5 million at the time by selling its Consumer Activity Tokens (CAT) to approximately 9,500 investors, including individuals and organizations based in the US.

The order from the SEC found that BitClave had violated the registration provisions of the federal securities laws. The company neither admitted nor denied the SEC’s finding, but it ultimately agreed to pay disgorgement of $25.5 million, prejudgment interest of nearly $3.5 million, and a penalty of $400,000.

“Issuers of securities, traditional or digital, must comply with the registration requirements of the federal securities laws. The remedies ordered by the Commission will provide meaningful relief to investors in this unregistered offering.” – said Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit.

Following the order, the SEC has established a Fair Fund to return all funds to the investors. The statement also informs that BitClave has agreed to transfer all remaining CAT tokens in its control to the fund administrator for permanent disabling, publish notice of the order, and request the removal of the coins from all cryptocurrency trading platforms.

BitClave’s Previous Legal Endeavors

Headquartered in California, the company filed a complaint in the state on May 22nd, 2018, against its former officer, director, and co-founder, according to the SEC order. BitClave alleged that he and his affiliated entity misused company funds raised in the CAT ICO.

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After a three-week trial a year later, the jury returned a verdict against the co-founder awarding BitClave $7.6 million in damages, $2.5 million on the claim for breach of fiduciary duty, and another $2.5 million for fraud against the affiliated entity.

Following this event, the company said that “due in large part to the distraction and cost of legal matters, BitClave determined that its business plan would not be viable and is in the process of winding down its operations entirely.” Ultimately, the firm stopped the development stages of the previously planned platform, dubbed the BitCLave Active Search Ecosystem (BASE).

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Read more on: SEC United States