SEC Charged California Crypto Project for $28,000,000 ICO Back in 2017

A California-based crypto project, Quantstamp, has been charged by the U.S. Securities and Exchange Commission (SEC) for conducting an initial coin offering (ICO) in 2017 that raised close to $30 million.

The SEC issued a new order stating that Quantstamp violated securities law by selling its QSP token without proper registration with the agency.

After negotiations, both parties have agreed on a settlement that includes penalties and the return of some funds to investors.

The SEC reports that Quantstamp raised $28.35 million by selling QSP to over 5,000 investors between October and November 2017.

The SEC says that Quantstamp stopped developing the ecosystem’s security auditing protocol in 2019, after using most of the ICO’s proceeds to develop and launch it.

In March 2018, Quantstamp made the first version of the Protocol public, which was six months after the offering.

An upgrade was released in September 2018, and the final version came out in June 2019, which was around 18 months after the offering.

For the development of the protocol, Quantstamp utilized over $26 million of the offering proceeds.

Following the final release in June 2019, Quantstamp stopped further development of the protocol and no longer provides significant support to it.

The SEC lawyers submitted a filing to Judge Jed Rakoff of the U.S. District Court for the Southern District of New York, respectfully arguing that the disputed portions of Ripple were inaccurately decided and should not be followed by the Court.

This was done in relation to the agency’s ongoing case against Terraform Labs and its former CEO, Do Kwon.

The SEC lawyers are currently exploring various options for conducting further review and plan to recommend pursuing such a review to the commission.

This indicates that the Ripple case may be appealed due to the determination that sales of XRP to third parties did not meet all securities offering requirements.