The US Securities and Exchange Commission (SEC) has ordered the token start-up ICOBox to pay fines in the millions. According to the verdict of a US court, the penalty is legally valid.
US District Judge Dale Fischer provides clarity in the case of a Californian crypto start-up: According to a statement, the court confirms a fine of 16 million US dollars, which the SEC demands from ICOBox. The fine is thus legally binding. The penalty notice, which the SEC had only submitted on 9 January this year, is directed both against ICOBox and its founder Nikolay Evdokimov. According to court records, the latter must pay a civil penalty of 192,768 US dollars.
Especially popular among fraudsters: ICOs
The reason for the criminal complaint is violations of existing stock exchange law. According to the SEC, ICOBox had neither a license to sell securities nor permission to act as a broker. It is true that the company had already conducted its ICO in 2017 during the last boom phase. However, the US Securities and Exchange Commission did not begin the legal review of the capital method until afterwards. The SEC considers almost all tokens to be securities, which in turn requires registration. However, ICOBox, like many other token start-ups, has never met this requirement. According to a press release issued by the SEC in September 2019, more than 2,000 investors were tempted to buy the tokens by the immediate token sale - and were bounced by the price slump.
The prospect of speculative gains was therefore decisive for the classification as a security. According to the Howey Test, a litmus test for the classification of securities, the prospect of profits is a clear indication of securities requiring registration.
By ignoring the registration requirements of securities laws, ICOBox and Evdokimov exposed investors to investments that are now virtually worthless - without providing information that is critical to making informed investment decisions,
says the SEC statement.
Founder disappears from the scene
According to the contents of a judicial press release on the ICOBox case, founder Evdokimov is currently on the run. Neither the court nor the SEC could win Evdokimov for a statement. Even worse: according to SEC information, the offices were found abandoned - since then there is no trace of the founder.
