SEC Orders Quantstamp to Refund investors $28m

Quantstamp to Pay SEC Fine & Refund $28M from Unregistered Coin Sale in 2017.

Blockchain security firm Quantstamp has reached an agreement with the U.S. Securities and Exchange Commission (SEC). This comes after charges about an unauthorized coin sale in 2017 that made $28 million. The SEC claimed Quantstamp conducted an unregistered coin sale of crypto assets.

As part of the agreement, Quantstamp will refund the coin sale proceeds. The company will also pay nearly $2 million, plus $494,314 interest, and a $1 million penalty.

Quantstamp was accused of selling "QSP" tokens to around 5,000 investors in 2017, raising over $28 million. They reportedly planned to use this money to create and market a platform for auditing smart contract security. 

But, the SEC said Quantstamp failed to register its offers and sales of QSP. They also did not qualify for any exceptions to registration. Quantstamp had filed a Form D claiming that the unregistered sales of QSP were exempt.

Although Quantstamp completed its platform in June 2019, the SEC order notes that it no longer operates or supports it significantly.

Finally, the agreement with the SEC establishes a Fair Fund to return money to "injured investors". Quantstamp needs to transfer all remaining QSP under its control to the Fair Fund to be permanently disabled or destroyed. However, the total funds for distribution may be less than the initial investment due to various factors.

Quantstamp must also make a public notice of the order on its website and tell crypto trading platforms that trade QSP about the order. This order is likely to impact Quantstamp’s future operations significantly. The company must address the SEC's concerns and ensure it follows regulations in the future.