The United Kingdom’s Blotics Ltd., formerly doing business as Coinschedule Ltd. and the U.S. Securities and Exchange Commission (SEC) have resolved charges relating to misleading information presented on the respondent’s website, according to a press release issued Wednesday. Reportedly, in anticipation of the cease-and-desist proceedings, the website platform, which publicized and ranked digital tokens offerings, agreed to a settlement barring Coinschedule from further violating the Securities Act of 1933’s anti-touting provisions and requiring it to pay $43,000 in disgorgement, interest, and a penalty of $154,434.
According to the SEC’s order, Coinschedule’s platform featured a central landing page and other webpages profiling individual token offerings from 2016 to August 2019. Information included “each token issuer’s logo, the token’s name, the number of tokens for sale, and information about the planned allocation of all remaining tokens to be distributed by the token issuer.” It also offered a “trust score” that purportedly reflected Coinschedule’s evaluation of the “credibility” and “operational risk” of each digital token offering based on a “proprietary algorithm.”
The SEC further explained that Coinschedule generated revenue based upon moneys received from token issuers who paid to list their tokens on the website at different rates sold as “marketing packages.” Problematically, the SEC said, Coinschedule never disclosed the pay-to-feature nature of its website to visitors.
Specifically, the agency took issue with the platform’s failure to disclose “which specific token issuers had paid for Coinschedule’s token offering promotions or other services related to their tokens and offerings, how much they had paid, and what specific platform content and publicity they had paid for.”
“As the SEC’s order finds, Coinschedule presented potential investors with seemingly independent profiles about token offerings when in fact they were bought and paid for by token issuers,” the SEC Enforcement Division’s Cyber Unit Chief, Kristina Littman said in a statement. “The securities law prohibiting touting securities for compensation without appropriate disclosures to investors is clear and longstanding.”
