The United States Securities and Exchange Commission (SEC) has confirmed charges against Enigma for conducting an unregistered offering of securities in the form of an initial coin offering (ICO).
According to the SEC report, the blockchain technology startup, Enigma raised about $45 million from sales of its ENG tokens in 2017.
The charges by the SEC result from the fact that the ENG tokens appear as securities. Also, Enigma didn’t register its ICO as a securities offering pursuant to the federal securities laws. Therefore, the ICO didn’t qualify for an exemption from the registration requirements.
SEC on Enigma
Besides, the agreement entails Enigma refunding harmed investors via a claims process. Other instructions by the SEC entails the firm registering its tokens as securities, filing periodic reports with the SEC. Also, to pay a fine of $500,000 penalty.
The SEC also ordered Enigma to stop committing or causing any violations of the registration provisions of the federal securities laws.
John T. Dugan, the Associate Director for Enforcement in the SEC’s Boston Regional Office commented on the situation. He said: “All investors get entitled to receive certain information from issuers in connection with a securities offering, whether involving more traditional assets or novel ones.”
“The remedies in today’s order provide ICO investors with an opportunity to obtain compensation. Also, providing investors with the information to which they’re entitled as they make investment decisions,” he also added.
The San Francisco and Israel based startup, Enigma reportedly consented to the order without admitting or denying the findings.
Besides, the firm claims the settlement clears the way for their development team to focus on its original vision.
Quoting them: “Enigma MPC reached a settlement with the US Securities and Exchange Commission (SEC) related to the issuance of ENG tokens in September 2017. We’re thrilled to put the process in the rearview mirror and turn back to our development work with full attention.”
In other words, their focus now lies on its newly launched mainnet. Enigma’s mainnet is a proof-of-stake blockchain based on Cosmos SDK/Tendermint. The mainnet’s also secured by a new native coin, Secret (SCRT), used for staking and transaction fees within the network. The new chain serves as the consensus layer for the Enigma network, replacing Ethereum.
Find out more about the Enigma platform here.