SEC Puts $7.6 Million Fine on Crypto Invention Database
The regulator has settled with Loci, a crypto-powered intellectual property search service.
- The SEC has placed a $7.6 million fine on Loci Inc., a cryptocurrency-powered invention search service.
- The regulator says that Loci misrepresented its business activities and did not register its ICO under securities regulations.
- Loci's token holdings will be destroyed and the LOCIcoin cryptocurrency will be removed from exchange listings.
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The U.S. Securities and Exchange Commission has announced that it has settled with Loci Inc., a startup that ran an ICO in 2017.
SEC Says Loci Violated Regulations
Loci provided an intellectual property search service called InnVenn that was aimed at inventors. The company also raised $7.6 million through an ICO sale of its Ethereum-based token, LOCIcoin.
Had the project succeeded, LOCIcoin would have been used to stake claims on InnVenn’s web service. This would allow investors to earn crypto rewards without ever selling their work.
The SEC says that Loci and its CEO made several false statements about the company’s revenue, employee count, and user base. It adds that Loci’s ICO was not registered with the SEC.
Furthermore, the SEC says that CEO John Wise used more than $38,000 of the ICO proceeds to pay personal expenses.
Kristina Littman of the SEC noted that Loci “misled investors regarding critical aspects of Loci’s business,” explaining that investors are “entitled to truthful information and fulsome disclosures so they can make informed investment decisions.”
Loci Faces Large Penalty
Loci is not required to admit or deny the SEC’s findings, but it has accepted penalties. Loci and Wise have been given a cease and desist order, and their crypto tokens will be destroyed.
The company must also request that trading platforms remove the LOCIcoin token from their listings. According to CoinGecko, only Bancor currently trades the token at present.
Wise will be barred from service as officer or director and must refrain from participating in future securities offerings.
Loci will also pay a $7.6 million penalty, the same amount of money as the company raised in its ICO sale.
The company’s website is currently inaccessible; as such, it has not made any public announcement regarding the settlement.
Disclaimer: At the time of writing this author held less than $75 of Bitcoin, Ethereum, and altcoins.