As the SEC continues to crack down on what they see as unlawful securities offerings, more companies find themselves in the crosshairs. One such firm, Gladius Network LLC, managed to avoid hefty fines and other SEC interjections by self-reporting their ICO. Now, many in the cryptospace are chiming in on the decision and how it could affect the entire cryptomarket.
Gladius's troubles began shortly following the completion of their highly successful 2017 ICO. The firm raised $12.7 million in Ether during the crowdfunding campaign. At around the exact same time, the SEC began their crypto crackdown. The SEC issued a number of statements during this time in which the organization described intentions to start regulating digital securities.
Gladius Makes the First Move
Recognizing that their ICO fell under the securities umbrella, Gladius decided it was best to self-report their actions to the SEC. This turned out to be a clever move as two similar ICOs that didn’t register now face legal ramifications. Both Carriereq Inc. and Paragon Coin Inc. were subject to hefty fines of $250,000 by the SEC this year. Additionally, both companies were forced to refund their investors.
Gladius managed to avoid steep fines and additional legal actions. The firm contacted the SEC directly. As part of their agreement, Gladius offered refunds to clients requesting such action. Also, the firm registered their tokens as securities. This move places Gladius's tokens under the Security and Exchange Act of 1934. Finally, the company agreed to file periodically with the SEC.
While some may see this as a loss for Gladius, most agree it was their best option. Not everyone is onboard with the maneuver. In a public interview, Gabor Gurbacs lamented the deal. He stated that it was a horrible example of how someone can violate all the SEC rules and still avoid any serious repercussions. He described how establishing a “safe-harbor for tokens” was a better option for the SEC to pursue.
The Nevada-based file storage firm Gladius entered the market in 2017. The company's goal is to end Distributed Denial of Service (DDoS) attacks via a decentralized network. Gladius nodes are able to protect their data through the integration of self-healing protocols. Additionally, requests are automatically directed to the closest host available.
Users earn Gladius tokens for sharing their unused HD space with the network. Those seeking to protect their websites from DDoS attacks utilize the Gladius network's distributed data strategy to eliminate these concerns. DDoS attacks are more common than ever before with one report showing a 2.5x increase in attacks over the last 3 years.
Forgive and Forget – SEC
Gladius may have dodged the bullet on this SEC encounter. It was wise for company officials to take a pro-active approach to the potential of an SEC intervention. This example could prove to set the tone for other firms that find their selves in a tight spot with the SEC regarding their ICOs. For now, both the SEC and ICOs are looking to this example as a guide on how to handle these scenarios in the future.