In a recent development, the U.S. Securities and Exchange Commission (SEC) Resolved It has partnered with cryptocurrency company Quantstamp after the SEC accused it of violating securities laws. Quantstamp agreed to settle with the SEC without admitting or denying the charges.
Part of the statement read:
Quantstump agreed to the stay order and agreed to pay $1,979,201 in disgorgement, $494,314 in prejudgment interest, and $1 million in civil penalties.
How Quantstamp violated securities laws
Quanstamp has raised over $28 million following an Initial Coin Offering (ICO) that sold its native token QSP to nearly 5,000 investors (including those residing in the US) in October-November 2017.
The SEC argued that these QSP tokens were securities when applied to the Howey test and that Quanstamp’s failure to register them violated federal securities laws. Quanstamp was released in 2017 as an automated smart contract security audit platform. And according to the SEC, Quanstamp sold this idea of a platform with huge potential during his ICO.
The company reportedly tricked these QSP buyers into believing that Quanstamp’s success would significantly increase the value of the QSP tokens and persuade investors to buy them. Regulators allege that Quanstamp’s actions fall under the Howie test’s key considerations.
The Howey test considers a transaction to be a security if it contains the following four elements: money investment. Investment in general companies. An investor who expects a reasonable return. Profits come from the efforts of others.
The regulator has claimed that the sale of QSP tokens to foreign investors is exempt from federal securities laws and has granted cryptocurrency firms an exemption from registration for QSP offers and sales. However, Quantstamp did not qualify for this exception because it sold to non-accredited investors in the United States.
QSP Price Stalls at $0.011 Following SEC Lawsuit | Source: QSPUSD on Tradingview.com
Quantstamp delivery failed
Quanstamp raised over $28 million in its ICO, surpassing its original goal of $11 million. This success of his ICO stands in stark contrast to the project’s launch luck. Quanstamp was predicted to disrupt the cryptocurrency industry with its revolutionary technology. However, cracks soon appeared in the system upon launch.
As an example, the project was harshly criticized by investors for accepting other payment instruments for audit purposes rather than just promoting the use of QSP tokens. Investors argue that this goes against the team’s promise to back native tokens.
Additionally, years after the ICO, there were also signs that seemed to suggest that the team had abandoned the project due to low activity.
QSP is currently trading near $0.0108, down more than 98% from its 2018 all-time high of $0.8664.
Featured Image, YouTube Chart on Tradingview.com
