Yet another fake initial coin offering (ICO) looking to take advantage of the popularity of cryptocurrency has fallen at the hands of regulators. ICOBox appears to have been nothing more than an empty box and the company, along with owner Nikolay Evdokimov, is now being sued by the U.S. Securities and Exchange Commission (SEC). The tokens offered by Evdokimov are reportedly only as valuable as a wooden nickel.
The SEC issued a press release yesterday in which it explained the lawsuit, stating that the securities offering initiated by ICOBox was illegal and that the company never secured a license to act as a registered broker. Despite the lack of regulatory approval, the company still managed to attract millions of dollars in investments.
ICOBox raised the money through an ICO in 2017, allegedly in order to develop the ICOS token. It attracted more than 2,000 investors and put around $14.6 million in the company’s wallet. The ICOS token, said the company, would be able to be swapped for other digital currencies at a discount on the ICOBox platform, but it was apparently all just a ruse. The company is also being called out for illegally acting as a broker, facilitating other ICOs that reportedly attracted over $650 million for an unspecified number of clients.
Michele Wein Layne, the SEC’s Regional Director in Los Angeles, states in the notice, “By ignoring the registration requirements of the federal securities laws, ICOBox and Evdokimov exposed investors to investments, which are now virtually worthless, without providing information that is critical to making informed investment decisions.”
According to a separate court filing, the SEC explains that it wants the courts to permanently enjoin the company and Evdokimov, as well as any officers, agents or others tied to the organization, for violating the U.S. Exchange Act. It also wants the courts to disgorge all funds from the illegal activity, as well as order civil penalties to be paid. The SEC, however, doesn’t specify how much monetary liability would be justifiable.
It adds, “Defendants claimed that ICOBox would be successful — and the ICOS tokens valuable — due to the efforts of ICOBox’s management team, who would curate potential digital asset projects and attract ‘100+’ clients per month. As of the date of ICOBox’s offering, ICOBox had yet to support a single token sale to completion.”
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