SEC goes after ICOBox for $16M over unregistered ICO

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The U.S. Securities and Exchange Commission (SEC) has sued ICOBox and its owner for $16 million in disgorgement and fines. The regulator accuses the company of conducting an illegal securities sale from which it raised $14 million. It also accuses the company of acting as an unregistered broker for other crypto offerings as well.

ICOBox described itself, according to the SEC, as a blockchain growth promoter and business facilitator for companies seeking to sell their products via crowdsales. However, under the leadership of its owner Nikolay Evdokimov, the company conducted an ICO in 2017, selling tokens to over 2,000 investors and raising $14.6 million.

The regulator sued the company in September 2019. Four months later in December, a judge in the California Central District Court ordered it to file a motion for default judgment before January 10 this year. Failure to file the motion would have seen the defendants walk away scot-free.

The SEC did submit the motion for default judgment as FinanceFeeds reported. According to the motion, which the watchdog filed in the same court, ICOBox and Evdokimov are jointly liable for disgorgement of $14.6 million which they gained from the illegal securities offering.

Further, they are liable for prejudgment interest of $1.5 million, totaling $16 million. Evdokimov is also required to pay $189,426 in civil penalties. They are required to pay the amount to the SEC within 14 days after the judgment is entered.

The SEC argued that the company knowingly denied the investors of some crucial information regarding its securities offering, information that the investors would have accessed had the offering been properly registered. Additionally, the company actively solicited investors to its clients’ securities offerings, receiving transaction-based compensation for its efforts.

These clients are alleged to have raised over $650 million, with ICOBox receiving a 1.5% fee. One of its clients was Paragon Coin, a company whose ICO was determined by the regulator to be a securities offering. ICOBox did this without registering as a broker-dealer which is a violation of federal securities laws.