WASHINGTON, Nov. 16 (Xinhua) -- U.S. Securities and Exchange Commission (SEC) said on Friday that two companies that sold digital tokens agreed to pay penalties due to violations in securities registration rules.
CarrierEQ, also known as Airfox, and Paragon Coin conducted initial coin offerings (ICOs) in 2017 after the SEC warned that ICOs can be securities offerings, according to the SEC.
The SEC said that Airfox and Paragon raised 15 million and 12 million U.S. dollars worth of digital assets respectively.
While multiple types of digital assets were treated as securities by the SEC, certain ICOs need to register with SEC or operate pursuant to an exemption.
However, neither Airfox nor Paragon registered their ICOs in accordance with the federal securities laws, nor did they qualify for an exemption to the registration requirements, said the SEC.
"We have made it clear that companies that issue securities through ICOs are required to comply with existing statutes and rules governing the registration of securities," said Stephanie Avakian, co-director of the SEC's Enforcement Division.
"These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets," said Avakian.
According to the SEC, both companies had agreed to return funds to harmed investors, register the tokens as securities, file periodic reports with the SEC, and pay 250,000-U.S.-dollar penalties respectively, without admitting or denying the findings of the SEC.
"These are the Commission's first cases imposing civil penalties solely for ICO securities offering registration violations," the SEC added.
