WSJ: Three ICO Startups Missed


Three firms that collectively raised about $40 million through unregulated ICOs in 2017 missed the deadlines set forward in their settlements with the SEC.

Several firms that collectively raised about $40 million through unregulated initial coin offerings (ICOs) in 2017 missed their deadlines to repay investors following charges by the United States Securities and Exchange Commission (SEC).

The Wall Street Journal reported on Nov. 14 that the firms agreed to repay investors or provide more transparency in exchange for lower fines, but did not follow through.

The tardy firms

Airfox and Paragon Coin missed the original deadline to repay investors who bought their tokens, which was set for Oct. 16. A third startup is over five months late on providing its investors the information they need to decide whether they want refunds.

Two of the three companies are mobile banking startup Airfox and cannabis blockchain platform Paragon Coin, which agreed to pay $250,000 fines as part of a settlement in November last year. In exchange, the firms have not been accused of fraud and had to bring their offering under SEC oversight and offer a refund to investors. Co-director of SEC enforcement Steve Peikin said:

“These orders provide a model for companies that have issued tokens in ICOs and seek to comply with the federal securities laws.”

The third company, cybersecurity startup Gladius, did not pay a penalty to the SEC after it settled, as the regulator gave it credit for self-reporting its violations. The three companies were all required to submit registration statements.

Both Airfox and Paragon filed the forms, but Paragon failed to answer a letter from the SEC inquiring about its accounting and shareholder rights. The company also did not issue any quarterly updates for its investors since registering its tokens with the SEC in March.

Gladius, on the other hand, was required by the terms of its settlement to file the registration statement by May 20, but claims that the deadline was extended until Nov. 18.

The other two companies also reportedly missed the deadline to repay investors seeking refunds, which was set for Oct 16. Airfox claims its deadline has been extended until Dec. 28. The company noted in a statement:

“Airfox has complied with all applicable deadlines, some of which were extended.”

Paragon’s website says that investors who desire a refund should submit their claims by Nov. 21, but their settlement order set a deadline in July. SEC documents show that both the companies may be lacking the funds to repay the investors, given that Airfox owes $15.4 million to its ICO participants and has $6.1 million in assets, including $5.4 in cash. Paragon’s current disclosed assets, on the other hand, are $95,659, while its liabilities are $14.9 million.

An inappropriate solution?

Former SEC enforcement lawyer Michael S. Dicke raised concern that such settlements are ineffective solutions:

“I looked at it then and look at it now as impractical, because for many projects they spent the money in accordance with what they told purchasers they would spend the money on—to build out the project. […] This kind of remedy really only works well when the issuer can pay back.”

In 2019, the SEC suspended securities trading of 271 issuers, obtained 31 court-ordered asset freezes and collected more than $4.3 billion in disgorgement and penalties. As Cointelegraph reported yesterday, Nov. 13, encrypted messaging service Telegram asked the New York Southern District Court to throw out accusations by United States regulators that its in-house cryptocurrency is a security.

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CoinMarketCap Now Provides Crypto Investors With Data on Liquidity


Crypto analytics provider CoinMarketCap has announced a new metric for liquidity of crypto exchanges and token pairs, designed to replace volume as the principal metric.

Leading crypto data site CoinMarketCap has announced the launch of its new metric to compare exchanges and token pairs based on liquidity.

New gadget on the dashboard

The announcement comes from The Capital, CoinMarketCap’s inaugural conference in Singapore on Nov. 12, and the tool is now live on the company’s site. The new metric will reportedly incorporate data from 3000 crypto assets.

Intending to filter out market manipulation, CoinMarketCap will reportedly base the new liquidity metric on adaptive data. Carylyne Chan, chief strategy officer at CoinMarketCap, elaborated on the firm’s aims with their methodology:

“We believe our adaptive methodology will make our metric very difficult to ‘game’ as orders would need to be placed close to the mid-price, or risk being counter-productive to the Liquidity metric scoring.”

Liquidity > Volume

The firm said that it sees its new metric as a way of escaping dependence on volume reporting, which is often subject to wash trading and other means of manipulation on different exchanges. At The Capital, Chan said that “volume has lost its value as a metric.”  She further explained CoinMarketCap’s desire to shift focus away from volume: 

“Today, we are introducing a new metric to highlight what matters most to investors and traders: liquidity. With our Liquidity metric, we hope to provide public good to the crypto markets by encouraging the provision of liquidity instead of the inflation of volumes.”

As of press time, CoinMarketCap had not responded to Cointelegraph’s request for more information. This article will be updated if Cointelegraph receives more information. 

Other new tools from CoinMarketCap

As Cointelegraph reported at the time, CoinMarketCap initially teased their planned liquidity metric at the end of August, in which they cited Nov. 12 as their target date.

In July, CoinMarketCap, alongside crypto news outlet Crypto Briefing, launched a new institutional-grade analysis product called Simetri. The product aims to provide verification and transparency in order-book data from crypto exchanges.

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