The U.S. Securities and Exchange Commission (SEC) and Nebulous have shaken hands and come to an equitable agreement. Nebulous will pay hundreds of thousands in penalties for offering an unregistered security and the SEC won’t throw a bigger book at the company. It’s a win-win and the quick resolution should allow the commission to concentrate on more important matters, such as how to classify digital asset projects with clear definitions.
Nebulous introduced its Sia decentralized cloud storage network in 2014, subsequently offering crypto tokens to support its development that same year. Investors would be rewarded based on future revenue generation earned through Sia network transactions, and this is where the program blew up in the company’s face.
That offer, asserts the SEC, was an attempt to sell unregistered securities, Sianotes. Nebulous reportedly took in $120,000 during the campaign, but is having to turn it all over to the SEC, and then pull even more out of its pocket to appease the commission.
According to an SEC notice on the subject, Nebulous will pay $225,000 in fines. This includes disgorgement of $120,000, interest of $24,601.85 and a civil penalty of $80,000. That money will ultimately go to the U.S. Treasury. The notice specifies that the agreement was reached without Nebulous admitting to or denying any wrongdoing.
Notably, the SEC didn’t take action against the company’s token itself, the Siacoin. Nebulous explains, “As reflected in the settled order, the SEC did not take any enforcement action with respect to the Siacoin token or any current activity on the Sia network, and the order does not require Nebulous to register the Siacoin token as a security with the SEC.”
The result is seen more in a positive light than in a negative one by Nebulous executives. The company’s chief operating officer, Zach Herbert, said in comments to The Block, “While disappointed that the SEC chose to pursue a steep penalty of almost double what we raised in our 2014 offering of Siafunds, especially compared to their lax handling of EOS, we view this settlement as highly positive for Sia. By choosing not to take action against Siacoins, we believe the SEC has validated Sia’s two-token model. We will continue to build and improve the Sia network at a rapid pace.”
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