Initial Coin Offerings (ICOs) on SEC’s Radar

Robinson+Cole Data Privacy + Security Insider
Contact

This month, the Securities and Exchange Commission (SEC) announced that it has entered into a settlement with SimplyVital Health, Inc., a blockchain company that offered and sold approximately $6.3 million worth of securities to the public. The SEC alleged that the plan to conduct an initial coin offering (ICO) to raise money to develop a “healthcare-related blockchain ecosystem” was done without proper registration with the SEC.

According to the SEC’s Order, SimplyVital Health, Inc. publicly announced its plan for the token sale and offered a new token called Health Cash or HLTH, to be used as currency in its Health Nexus. “SimplyVital concurrently announced that it would conduct a ‘re-sale’ of its HLTH tokens, in which it offered investors Simple Agreements for Future Tokens, or SAFTs, under which it sold HLTH tokens that would not be delivered to investors unless and until created by SimplyVital. The order finds that SimplyVital did not file a registration statement with the Commission or qualify for an exemption from registration before offering and selling HLTH to the public through the SAFTS.” The failure to register violated the registration provisions of Section 5(a) and (c) of the Securities Act of 1933.

SimplyVital agreed to a cease-and-desist order and to voluntarily return substantially all of the funds raised during the pre-sale back to investors.

There is a lot of chatter about blockchain technology and ICOs. People and entrepreneurs want to get in on the action. The SEC is following ICOs closely and its settlements, like other regulatory agencies, offer guidance as to its interpretation of governing laws that may have been enacted long before new technology. Following the guidance and being aware of legal requirements with new technology is key to compliance as regulatory agencies adapt to new technology.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Robinson+Cole Data Privacy + Security Insider | Attorney Advertising

Written by:

Robinson+Cole Data Privacy + Security Insider
Contact
more
less

Robinson+Cole Data Privacy + Security Insider on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.