The ICO boom may be over, but the U.S. Securities and Exchange Commission appears to be just getting started.
Salt Lending has become the latest target of the regulator after the SEC issued a cease-and-desist letter to the crypto-backed lender, aka Salt Lending, on Sept. 30. In its letter, the securities watchdog stated that Salt “violated Section 5(a) of the Securities Act” with its 2017 token sale in which it raised $47 million.
The letter also outlines a settlement between Salt Lending and the SEC, the details of which Salt director of marketing communications, Kendra Staggs, shared with BeInCrypto, saying,
“Salt has cooperated with the SEC and has been working toward a settlement for many months. Under the terms of the SEC Settlement, the company will register SALT Tokens under Section 12(g) of the Securities Exchange Act of 1934 as a class of securities, maintain that registration and make timely filings as required by law and the SEC Settlement, and pay a civil monetary penalty of $250,000.”
She went on to explain,
“In addition, under the terms of the SEC settlement, the company will administer a claims procedure available to those who purchased SALT Tokens directly from the Company before and including December 31, 2019.”
Hindsight Is 20/20
Alan Silbert, executive managing director at registered digital asset exchange INX, suggested the entire situation could have been avoided if Salt had just registered its token in the first place.
INX is behind the maiden security token IPO on the blockchain, which got the green light from the SEC. The IPO also broke new ground for its ability to accept cryptocurrencies bitcoin, ether, and stablecoin USDC as a payment method for the INX token. According to the SEC filing,
“The Company intends that bitcoin or ether received as payment will be sold promptly as the Company does not intend to hold bitcoin or ether as ongoing investments.”
Early DeFi Project?
Salt is a lending platform that issues crypto-backed loans. If that sounds familiar, it’s because that’s precisely the type of protocol that has flooded the DeFi space. One Reddit member took notice, suggesting it was an early DeFi idea that flopped:
“Kik” the Can
Salt Lending is the latest company to be on the radar of the securities watchdog, but it’s not the only one. Messaging app Kik has been battling it out in the courts for more than a year over a $100 million token sale. The regulator maintains that Kik failed to register its Kin token as a security, calling the ICO “illegal.”
Kik CEO Ted Livingston vowed to fight the SEC in court, saying a year ago that “becoming a security would kill the usability of the coin and set a dangerous precedent for the industry.”
Most recently, Bloomberg Law reported that a judge held Kik’s feet to the fire for not registering its token as a security.