SEC Seeks $2 Million Fine from Unregistered ShipChain ICO

The United States Securities and Exchange Commission (SEC) has issued a cease and desist order against ShipChain, a Blockchain Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned). In this sense, blockchain is immune to the manipulation of data, making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamp Read this Term company that raised $27.6 million in an Initial Coin Offering (ICO) Initial Coin Offering (ICO) An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Acco An Initial Coin Offering (ICO) is a kind of crypto token sale that is used as a method of fundraising, similar to an Initial Public Offering (IPO), in which stocks are sold to raise money for a company.In order to launch an ICO, a company simply needs to create a website, issue a token, and set a time and date for the sale. Investors buy ICO tokens in exchange for another cryptocurrency, like Bitcoin or Ethereum; after a set amount of time, they receive the tokens they purchased in the sale.Acco Read this Term), for allegedly distributing unregistered securities.

ShipChain raised the handsome amount by selling SHIP tokens between 2017 and 2018, riding on that ICO wave. The company promised to develop an Ethereum-based blockchain system to track the shipping containers.

The financial market regulator is now alleging that the tokens fall under the category of securities, but the blockchain company did not register them as one. ShipChain sold more than 145 million SHIP tokens.

The company approached the investors promising to utilize the proceeds from the ICO to develop the blockchain system that will “jumpstart the ShipChain economy and supplement funding to help [ShipChain] deliver the best product possible.”

Bust of Another ICO

“A purchaser in the offering of SHIP tokens would have had a reasonable expectation of obtaining a future profit based on ShipChain’s representations and efforts to build its business, including through its use of the ICO fund proceeds to develop its platform,” the SEC noted in its order.

Now, the regulator wants the blockchain company to transfer all SHIP tokens to it and delist them from crypto exchanges. Additionally, it is seeking a civil penalty of $2,050,000.

The impact of the order is reflected on the crypto market as the SHIP token prices plummeted over 62 percent in the last 24 hours. Currently, SHIP tokens are trading at $0.001179, while at the peak in April 2018, each token was priced at $0.19.

Furthermore, ShipChain received a similar cease and desist order in May 2018 from the securities regulator in South Carolina, where the company is based, for violating state securities laws.