ICO Rating, a Russia based initial coin offering and research firm, has paid a fine to the US Securities and Exchange Commission (SEC) regarding allegations that it failed to disclose payments received from issuers for publicizing their digital asset securities offerings.
According to a statement from the SEC, ICO Rating shall pay disgorgement of $100,572, prejudgment interest of $6,426, and civil money penalty of $162,000 for a total of $268,998 to settle charges.
According to the SEC, ICO Rating is based in St. Petersburg, Russia but has claimed in the past to have had offices in Singapore, New York, and Amsterdam.
The SEC states that since 2016, ICO Rating has provided review and rating services on its website for initial coin offerings (ICOs), as well as reports and posts on social media. These reports covered “tokens” or “coins” that were securities. ICO Rating billed itself as “a rating agency that issues independent analytical research,” and stated that its mission is “to help the market achieve the necessary standards of quality, transparency and reliability.” The SEC says that ICO Rating “failed to disclose that it was paid by certain issuers whose ICO offerings it rated.”
Melissa Hodgman, Associate Director of the SEC’s Enforcement Division, commented on the enforcement action:
“The securities laws require promoters, including both people and entities, to disclose compensation they receive for touting investments so that potential investors are aware they are viewing a paid promotional item. This requirement applies regardless of whether the securities being touted are issued using traditional certificates or on the blockchain.”
ICO Rating is but one of a good number of digital asset rating platforms – many of which have long been rumoured to accept money for ratings. Some, so-called, ICO advisors have also received remuneration to promote certain ICOs but to date, the SEC has not pursued any these individuals.
The SEC’s order finds that ICO Rating violated the anti-touting provisions of Section 17(b) of the Securities Act of 1933.
Without admitting or denying the SEC’s findings, ICO Rating agreed to cease and desist from committing or causing any future violations of these provisions.