The United States Securities and Exchange Commission has determined that Salt Lending’s 2017 Initial Coin Offering (ICO) was an unregistered securities offering, the financial watchdog said in a public letter on 30 September.
According to the announcement, Salt Blockchain Inc., the owner of the lending platform, now has 14 days to issue a press release announcing it would start the process of offering refunds to the investors that purchased SALT tokens by the end of 2019. While the ICO raised around $47 million between June and December 2017, the firm was able to sell an additional $1.2 million worth of SALT tokens through August 2019.
The financial regulator stated that the firm’s ICO violated securities regulations by not registering the sale of its SALT tokens beforehand. The token itself was considered a security as Salt Lending told investors they could expect a return on their investment. During the ICO, the SALT tokens were sold for $10 each, but according to data from CoinMarketCap, the token is now trading for around $0.14.
When Salt Lending makes its announcement, investors will have three months to submit a claim to the firm, which will be obligated to pay back their investment with any agreed interest. The firm has further agreed to register its tokens as a security with the SEC, and also pay the financial regulator a $250,000 civil penalty fine in the next 10 days.
Back in November 2018, The Wall Street Journal reported that the firm was under investigation by the financial watchdog, which apparently served a subpoena to the firm in February 2018, seeking records connected to the ICO. While his name was not mentioned in today’s SEC order, it seems that the SEC initially started their investigation because of Erik Voorhees, the CEO of crypto exchange ShapeShift. Voorhees had settled with the SEC in 2014, agreeing to not raise money in private markets, and yet was on the board of the firm.