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Coinschedule Fined $200,000 by SEC for Violating Anti-Touting Provisions


cryptoknowmics.com 15 July 2021 02:21, UTC
Reading time: ~3 m

The US Securities and Exchange Commission(SEC) announced today that it has settled charges against the now-defunct initial coin offerings(ICOs) profiler Coinschedule.com for violating the anti-touting provisions of the federal securities laws. The securities regulator alleged that the company failed to disclose its compensation from the issuers of digital assets profiled on its website.

In response to the move, two SEC commissioners have penned a statement in agreement expressing dissatisfaction with the lack of clarity in the settlement.

SEC Fines Coinschedule for Touting ICOs

As per a press release issued by the SEC on July 14, UK-based Blotics, previously known as Coinschedule, has agreed to pay $154,434 in penalties and an additional $43,000 in disgorgement, with prejudgement interest. The company has neither admitted nor denied any of the charges leveled by the SEC.

Coinschedule was operational in the United States between 2016 and 2019, and during this time frame, a significant portion of its visitors was comprised of people from the US. The website provided details about each of the profiled digital token offerings with a so-called “trust score”, which used a proprietary algorithm to evaluate the “credibility” and “operational risk” of an asset. However, the SEC found that the entire system was fraudulent. In its press statement, the commission noted:

“In reality, the token issuers paid Coinschedule to profile their token offerings on Coinschedule.com, a fact that Coinschedule failed to disclose to visitors.”

The company kept publishing many of the profiles even after the SEC issued its DAO Report in 2017, which warned investors that ICOs may be securities, and as such, those who want to sell them in the US must comply with the federal securities laws.

Kristina Littman, Chief of the SEC Enforcement Division’s Cyber Unit, said that Coinschedule was responsible for misleading investors with ICO profiles paid for by token issuers. “The securities law prohibiting touting securities for compensation without appropriate disclosures to investors is clear and longstanding,” she added.

Hester Price and Elad Roisman Disappointed With the Settlement

The SEC settlement in Coinschedule’s case has invited criticism from its commissioners Hester Pierce and Elad Roisman, who released a statement on the matter. While the duo agreed that the company violated federal laws, they were dissatisfied with the settlement as it failed to offer clarity for other market participants. 

“The commission’s settlement with Coinschedule did not explain which digital assets touted by Coinschedule were securities, an omission of which is symptomatic of our reluctance to provide additional guidance about how to determine whether a token is being sold as part of a securities offering or which tokens are securities,” Price and Roisman wrote.

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