In a current advancement, the United States Securities and Exchange Commission (SEC) has settled with crypto company Quantstamp following charges of breaching securities law which the SEC leveled versus it. Quantstamp accepted settle with the SEC without confessing or rejecting the charges.
Part of the declaration checked out:
Quantstamp accepted a cease-and-desist order and to pay disgorgement of $1,979,201, prejudgment interest of $494,314, and a civil charge of $1 million.
How Quantstamp Violated Securities Laws
Quanstamp raised over $28 million following its Initial Coin Offering (ICO) in October-November 2017 when it offered its native token QSP to near 5,000 financiers (consisting of ones living in the United States).
The SEC declared that these QSP tokens were a security when used to the Howey test, and Quanstamp’s failure to register them breached federal securities laws. Quanstamp proceeded to introduce in 2017 as an automated wise agreement security auditing platform. And according to the SEC, Quanstamp, throughout its ICO, offered this concept of its platform boasting big capacity.
The company supposedly led these QSP buyers to think that Quanstamp’s success might make the worth of the QSP tokens increase enormously, persuading financiers to buy the tokens. The regulator declares that Quanstamp’s actions fall under the essential factors to consider for the Howey Test.
Under the Howey test, a deal is thought about a security if it consists of these 4 aspects; Investment of cash; Investment remaining in a typical business; Investors anticipating sensible earnings; Profits being stemmed from the efforts of others.
The regulator confesses that the crypto company declared an exception from registering its deals and sales of QSP as it argued that the sale of QSP tokens to foreign financiers was exempt from federal securities laws. However, Quantstamp stopped working to receive this exception by offering to non-accredited United States financiers.
QSP rate stalls at $0.011 following SEC claim | Source: QSPUSD on Tradingview.com
Quantstamp Failed To Deliver
Quanstamp exceeded its preliminary objective of $11 million by raising over $28 million from the ICO. This effective ICO remains in plain contrast to the job’s fortune upon launch. Quanstamp was predicted to interrupt the crypto market with its ingenious innovation. However, fractures rapidly displayed in the system upon launch.
For one, the job gotten heavy criticism from financiers for accepting other ways of payment for audits rather of exclusively attempting to promote making use of its QSP token. Investors claim that this broke the group’s guarantee to prop up the native token.
Additionally, there were indications which appeared to recommend that the group deserted the job a couple of years after the ICO due to low activity.
QSP is presently trading at around $0.0108, over 98% below its all-time high of $0.8664, which it accomplished back in 2018.
Featured image from, YouTube chart from Tradingview.com