ICO News

Boston startup slapped with $350G in fines


A Boston startup will pay a combined $350,000 to state and local regulators for running an initial coin offering, a method of raising money from investors through cryptocurrency that critics said included no regulatory oversight and was ripe for fraud.

“As I said when my office first began its sweep of ICOs last year, there is little question that many of these ICOs constitute securities offerings which need to be registered or exempt from registration in the Commonwealth,” Massachusetts Secretary of State William F. Galvin said in a statement. “My office will continue to aggressively police these offerings in Massachusetts to protect our investors.”

AirFox, which is developing mobile software for countries without easy access to banks, raised $15 million by selling AirTokens, which the company has said will be used to buy the company’s services. Companies selling cryptocurrencies such as AirTokens have raised billions of dollars, largely by selling to buyers who hope to profit by flipping their investments. Some companies have been accused of being outright frauds, selling the promise of a product with no intention of building it. There is no allegation of fraud or investor deception in the AirFox case.

AirFox will also pay $250,000 to the SEC after the federal agency said the company failed to register its sale as an investment sale.

In a statement, Airfox said it would continue to use its token model after registering with authorities.

“As one of the first companies to reach a resolution with the U.S. Securities and Exchange Commission on an initial coin offering, Airfox expects to continue growing its blockchain platform within a regulatory framework,” the company said. “Our team continues to forge ahead on our mission to democratize financial services for the billions of unbanked in emerging markets.”

 





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