SEC charges ICO Rating for failing to disclose payments by projects

The Securities and Exchange Commission (SEC) has charged Russian company ICO Rating for failing to disclose that it had received payments from projects it provided ratings for.

According to the announcement on the SEC’s website, ICO Rating has agreed to pay a sum of $268,998 to settle charges relating to its failure to disclose payments it received from issuers to publicise their digital asset offerings.

ICO Rating portrayed itself as a rating agency that issued independent analytical research. Its mission was “to help the market achieve the necessary standards  of quality, transparency, and reliability”.

Between December 2017 and July 2018, the company produced several research reports and ratings on multiple types of blockchain-based assets, including tokens and coins that were securities.

ICO Rating then published its findings and results on its website and across social media.

However, the company failed to disclose that it was paid by certain issuers whose ICO offerings were rated.

On this basis, the SEC has found that ICO Rating violated the anti-touting provisions of Section 17(b) of the Securities Act of 1933.

ICO Rating has neither admitted nor denied the SEC’s findings, but it has agreed to cease and desist from committing or causing any further violations and to pay the fine.

Melissa Hodgman, associate director of the SEC’s enforcement division, said: “The securities law requires promoters, including both people and entities, to disclose compensation they receive for touting investments so that potential investors are aware they are viewing a paid promotional item.

“This requirement applies regardless of whether the securities being touted are issued using traditional certificates or on the blockchain.”

Interested in reading more SEC-related stories? Discover more about Veritaseum CEO Reggie Middleton contesting an emergency lawsuit from the US regulator.