The IoT security firm Atonomi faces a $25 million class-action lawsuit for failing to register their ICO with the SEC according to recent court documents filed in Washington State. Investors in the Atonomi platform claim that the firm misrepresented its progress and development team’s experience. Now, a Washington Court will determine the fate of these millions.
In 2018, Atonomi made headlines after securing $25 million in funding via an ICO. Since that time, the project has seen little development. Consequently, the value of the Atonomi token dropped by ninety-nine percent. As a result, investors are understandably upset and many feel as is they were scammed.
Luckily, there is some recourse due to the manner in which Atonomi hosted their ICO. Investors now claim the firm failed to register with either Washington State or the Feds. In the lawsuit, they seek a full refund of the $25 million raised from the ICO.
Discussing the matter via social media, an attorney familiar with the case, Stephen Palley, explained that Atonomi issued SAFT contracts to investors. A SAFT Contract (Simple Agreement for Future Tokens) is an investment contract used by ICOs to meet federal and local regulations. When used, firms must register their crowdfunding event with the SEC. Not surprisingly, Atonomi failed to do so.
Hold Management Team Liable
The lawsuit seeks to hold the management team behind the Atonomi ICO financially and legally liable for losses. Robert Strickland is listed as the CEO of the firm. There are no public comments from the Atonomi team regarding the lawsuit.
Atonomi is a blockchain-base IoT (Internet of Things) security protocol. The platform enables IoT developers to embed identification and reputation solutions directly into their networks. Unfortunately, Atonomi failed to create a real use case for their token. This makes it’s token’s only use as an investment vehicle, which furthers the argument that the Atonomi Token is a tokenized security.
Security Token vs Utility
The SEC started cracking down on what they deem “illegal security offerings” in early 2018. Since then, a number of high profile cases emerged. These cases have gone in different directions. In the case of Ripple, the court found that the crypto had a true utility and therefore, was not a security token.
The SEC Chairman, Jay Clayton, deemed that Ethereum acted as a security during the crowdfunding phases of the operation but today is a utility token. They decided against pursuing the crypto for its initial crowdfunding breaches. While both of these cases sided with the ICO, there are many others that went in the opposite direction.
SEC on the Hunt
The Paragon Coin project is currently facing legal ramifications for offering securities illegally. In this instance, the celebrity promoters, the rapper The Game, and former Miss Iowa, Jessica VerSteeg, also face charges for their participation. The case signals increased prosecution for those assisting in the sales of illegal securities.
More to Come
You can expect to see more lawsuits regarding shady 2017 -2018 ICOs emerge. These investors are on the warpath after billions of dollars disappeared behind the smoke of the ICO rush. Atonomi seems to face an uphill battle. Their failure to register with the local authorities, combined with the lack of transparency regarding development, could result in a huge downfall for the firm.
Blockport STO Fails to Gain Traction – Platform to Shutdown
Failure to Launch
On a disappointing note, Blockport has announced the cancellation of their ongoing security token offering. After launching the event, roughly 1 month ago, the team has indicated that they have failed to attract their minimum threshold of investments.
This comes as a letdown to the industry, as Blockport represented one of the first security token offerings to be offered through the Tokeny platform. To date, only a handful of STOs have taken place through ANY issuance platform.
While Blockport will be returning investments to the few participants in their STO, they have indicated that this is not the end for them. Their intent is to scale back operations in the short term, reflect, and establish a path for future growth.
This means that the platform will be shutting down in the coming weeks, revering to a ‘development mode’.
Blockport CEO, Sebastiaan Lichter, elaborated on the cancellation in a statement to the public. The following is what he had to say on the matter.
“In the past few months our team has worked extremely hard to launch the first round of our STO, and yesterday this ended after being open for almost one month…In short, the results of the fundraise are not sufficient to proceed with the issuance of BPS tokens.”
Despite this, Sebastiaan Lichter remained confident in the future of blockchain. He continued,
“We still see a lot of opportunities in this industry and have built a top performing trading platform that many people love to use and which has had almost zero downtime or issues since we launched it in the summer of 2018…Whilst developing our platform, our goal is to explore opportunities that support a restart of the Blockport platform in the future.”
Operating out of Amsterdam, Blockport is a Dutch company, which was launched in 2017. Under the watch of CEO, Sebastiaan Lichter, Blockport has developed and launched a trading platform, tailored toward, both, utility and security tokens.
The security token offering, discussed here today, was launched through the Tokeny issuance platform, on March 31st, 2019.
Tokeny is a Luxembourg based company, which was launched in 2017. Above all, Tokeny acts as an issuance platform, providing companies with solutions for the tokenization of assets. Tokeny was responsible for facilitating the Blockport STO – For their part, the event went off without a hitch.
In Other News
While the failed STO is an unfortunate situation, BlockPort is by no means alone. For a variety of reasons, there have been various deals to have fallen through in the past few months. The following articles detail a couple of these situations.
BitBond Opens Bounty Program for Live Security Token Offering
BitBond, a blockchain company hosting a FINRA approved STO, has recently announced the launch of a bounty program. This program was launched in an attempt to raise market awareness of their ongoing security token offering.
This STO, scheduled to be live until early June, has seen modest success thus far, with investors contributing over €2 million to date. This puts them well on their way to raising the minimum €3 million in the event.
In an attempt to ensure the minimum €3 million threshold is met in their STO, the bounty program consists of 6 main ways in which participants can be rewarded.
- Hunter Bounty
- Referrals leading to bounty program participation
- Affiliate Bounty
- 5% commission on referrals leading to investments over €10,000
- Signature Bounty
- Token compensation for active BitcoinTalk users which advertise the STO in their signature.
- Creative Bounty
- Rewards for creative advertising in the form of memes, gifs, images, etc.
- Social Media Bounty
- Compensation for STO promotion through qualified Twitter, Facebook, LinkedIn, and Telegram accounts
- Content Bounty
- Rewards for creation of articles, and videos, which raise awareness about the BitBond STO.
A bounty program is a promotional event, aimed towards raising awareness of a fundraiser. Participants in such programs are typically compensated for promoting a company with tokens. Promotional tasks are often varied, such as writing articles, attaining referrals, reporting bugs, and so on.
While bounty programs were commonplace throughout the ICO boom, the concept is new when being applied to security token offerings. Time will tell if this promotional tool is an effective one when dealing with this new form of fund raising.
BitBond CEO, Radoslav Albrecht, commented to CrytoGlobe on the choice to host a bounty program. He stated the following.
“Since our launch in 2013 Bitbond has always worked closely with the crypto and blockchain community. This bounty program gives us the opportunity to engage further with our community, reward Bitbond early adopters and spread the news about our new groundbreaking project, the Bitbond STO.”
BitBond is a Germany based company, which was launched in 2013. Above all, BitBond utilized blockchain to facilitate financial services. This primarily includes the issuance of business loans.
Company operations are overseen by Founder and CEO, Radoslav Albrecht.
We recently detailed BitBond and their FINRA approval – a feat not achieved by scores of applicants prior to BitBond. Check out the details to this success HERE.
In Other News
Beyond BitBond utilizing the Stellar blockchain for issuing security tokens, Stellar has experienced growing levels of adoption in recent months. The following articles demonstrate various ways in which this adoption has occurred.
Poloniex Cleans House as Tokens Delisted for Fear of Being Called Securities
Poloniex Delisting Assets
Poloniex has given unfortunate news to enthusiasts of various assets supported through their platform. The popular exchange has announced that, due to ongoing regulatory uncertainty, they will be de-listing a variety of assets.
This event is a precautionary one, as the possibility exists that the structuring of these assets would classify them as securities. Fearing retribution from the SEC, Poloniex has decided to play it safe, and remove their support.
While the portfolio of offered assets on Poloniex remains strong, this does not mean that other assets can rest easy.
It has been made known, by various industry participants, over the past few weeks that uncertainty remains pervasive in the digital securities space. This is largely, in part, due to a lack of clarity afforded by United States regulatory body, the Security and Exchange Commission.
Until the SEC is able to provide more detailed guidance on these digital assets, expect to see more de-listings, for fear of these being dubbed securities.
Down and Out
The affected assets in this announcement total 9, which each unique in their structuring and target markets. They are as follows,
- Augur (REP)
- Omni (OMNI)
- Decred (DCR)
- Game (GAME)
- Ardor (ARDR)
- Bytecoin (BCN)
- Gas (GAS)
- Lisk (LSK)
- Nxt (NXT)
In a statement to the public, Poloniex explained their reasoning for the delisting of various assets. The Poloniex team broke the news, to holders of these tokens, by stating the following.
“We are committed to complying with regulatory requirements in every jurisdiction. Today’s action is a result of regulatory uncertainty in the US market. Specifically, it is not possible to be certain whether US regulators will consider these assets to be securities.”
Despite this, the team continued, expressing optimism moving forward.
“We understand how frustrating this choice is for our customers, and for the crypto community more broadly. We believe in the power and potential of these assets, and will continue to focus time and energy on supporting positive policy and regulatory developments for crypto assets in the US and around the world.”
Poloniex is a Delaware based cryptocurrency exchange, which was launched in 2014. In the time since their launch, Poloniex has gone on to establish themselves as a leading exchange. Poloniex’s reputation has been strengthened in the past year, since being acquired by Circle.
Circle is a Boston based company, which made waves in 2018, when their $400 million acquisition of Poloniex occurred. In the time since this move, Circle has worked to bring Poloniex in line with regulations, building a strong reputation, and growing the platform at the same time.
In Other News
While this is unfortunate news for enthusiasts of the affected assets, Poloniex doesn’t simply have a habit of delisting. In previous months, we have noted their addition of Polymath and their utility token for use through their security token’s tailored services.
- Blockport STO Fails to Gain Traction – Platform to Shutdown May 18, 2019
- BitBond Opens Bounty Program for Live Security Token Offering May 18, 2019
- Poloniex Cleans House as Tokens Delisted for Fear of Being Called Securities May 18, 2019
- Blockstream to Add Support for Digital Securities on Liquid Security Platform May 17, 2019
- OpenFinance Brings Support State-side for Third Party Digital Securities May 17, 2019