Connect with us

Regulation

Atonomi ICO Slapped with $25 Million Lawsuit

mm

Updated

 on

Atonomi ICO Slapped with $25 Million Lawsuit

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.

Full Refund

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.

Palley via Twitter Discussing Atonomi Lawsuit

Palley via Twitter Discussing Atonomi Lawsuit

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

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.

Spread the love

David Hamilton is a full-time journalist and a long-time bitcoinist. He specializes in writing articles on the blockchain. His articles have been published in multiple bitcoin publications including Bitcoinlightning.com

Advertiser Disclosure: Securities.io is committed to rigorous editorial standards to provide our readers with accurate reviews and ratings. We may receive compensation when you click on links to products we reviewed.

ESMA: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Investment advice disclaimer: The information contained on this website is provided for educational purposes, and does not constitute investment advice.

Trading Risk Disclaimer: There is a very high degree of risk involved in trading securities. Trading in any type of financial product including forex, CFDs, stocks, and cryptocurrencies.

This risk is higher with Cryptocurrencies due to markets being decentralized and non-regulated. You should be aware that you may lose a significant portion of your portfolio.

Securities.io is not a registered broker, analyst, or investment advisor.