Another ICO was found to be illegal: The Token Sale of the company Salt. Together with the SEC, they are now seeking redress.
On 30 September 2020, the US Securities and Exchange Commission (SEC) published an official court order regarding the 2017 token sale for Salt. This states that Salt Blockchain Inc. must now make refunds to all participants due to the lack of registration of the ICO (Initial Coin Offering).
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The SEC has imposed a 14-day deadline on the credit platform. During this period, Salt must publish an official report on its website. This should indicate that investors will be able to claim refunds. All they need to do to initiate the reimbursement is to fill out an official application form. All persons who purchased Salt before 31 December 2019 are eligible to do so.
The US authorities argue that Salt’s ICO violated securities laws by not officially registering the Token Sale. Salt is considered a security and not a functional currency. One of the reasons for this is that the company promised potential profits to its investors.
Salt seeks agreement
The ICO took place in June 2017 and raised $47 million from investors at the time. In further sales that took place after the official ICO, Salt raised a further US$1.2 million.
As Salt had not filed a registration and did not qualify as an exception, the Token Sale was considered a violation of Sections 5(a) and 5(c) of the Securities Act.
Section 5(a) states that any interstate sale and carrying of unregistered securities is illegal. Section 5(c) considers it unlawful for persons to sell, directly or indirectly, unregistered securities in interstate commerce. An agreement with the SEC does not imply that Salt admits or denies the allegations.
The credit platform has made every effort to settle the case. In doing so, the company complied with the SEC requirements. This now means that Salt has to pay a fine of US$ 250,000 within the next 10 days. In addition, the process for refunds during this period should be initiated. Finally, the associated token, SALT, must be officially registered as a store of value with the SEC.
In an official statement the company states the following:
Salt has always cooperated with the SEC and has been working on an agreement with the SEC for several months. During this time, the platform has continued to grow and has demonstrated the viability of the lending business and technology. Now that the Company and SEC have reached an agreement, the Company plans to expand its product offering to include asset management and preservation.
A judgement in a similar case was rendered on 30 September. In this case, the token sale of Kik Interactive Inc. was found to be illegal. The company is now working on an agreement with the SEC.