Gladius Network, which launched an ICO in 2017 and raised $12.7 million during a public token sale, has officially closed its doors after the US Securities and Exchange Commission (SEC) handed down cease-and-desist proceedings.
The Nevada-based company was established to provide blockchain cybersecurity services. However, the SEC officially ruled that the company’s tokens were securities according to the Howey Test.
The ruling, which was published February 20 2019, suggested that while Gladius had indeed broken securities laws, it had also taken “significant steps” to remediate its violation, and had also voluntarily committed to compensate its ICO investors.
In August, community admins informed Gladius token holders that the SEC had granted an official extension for registration of the token as a security.
However, it has now emerged that the project has run out of funds and filed for dissolution, despite investors still waiting for their money back.
Gladius team member Alex Godwin wrote in the official Telegram channel:
“We regret to inform you that Gladius Network LLC has ceased operations effective immediately and has filed for dissolution. Despite our best efforts, the company no longer has funds to continue operations.”
The announcement could therefore mean that Gladius Network will not be able to meet its legal commitments in reimbursing ICO investors.
It’s difficult to gauge the response of the Gladius community to the recent news, as the admin of Gladius’ official Telegram closed the group for open chat back in July, claiming:
“Recently there has been an uptick in unhelpful conversations that we can’t currently moderate, including: threats against the team, insults, spam, and general unhelpful speculation. As a result, we have decided to limit the scope of our communication to this channel, and mute participation besides administrators.”
The Gladius Network official Twitter is similarly quiet, having been locked only to approved followers.
However, a group called the ‘Gladius Rektiers’ has formed on Telegram, which according to Reddit user @BittBurger is exploring legal action against the Gladius team.
— BittBurger (@BittBurger) November 23, 2019
Coin Rivet reached out to a representative of the group, who explained:
“The announcement that the company was dissolving was two days ago, but I don’t know if that has any bearing on the SEC’s requirement that they refund investors, which they did require them to do over a year ago.”
Members of the group have also expressed their dissatisfaction that the SEC has continuously moved the deadline by which Gladius was required to provide compensation to investors.
A member of the group, who provided a report on Gladius’ activities in August, had this to say about the Gladius founders:
“The folks behind the project are long time, prolific criminals of a high order.”
There has been no official press release from the Gladius Network team so far, and its website has reverted to a message detailing its closure.