SEC Distributes $4.6 Million to BitClave ICO Investors

The U.S. Securities and Exchange Commission (SEC) has authorized the distribution of over $4.6 million to investors affected by BitClave’s initial coin offering (ICO). The funds are part of a return plan set up following the SEC’s investigation into the Ethereum-based search engine ICO, which raised significant concerns regarding compliance with securities laws.

In an official announcement via X, the SEC stated that the payment was part of the BitClave Fair Fund, which aims to compensate harmed investors. “After a notice & claims process, investors will now be receiving their share of the BitClave Fair Fund,” the SEC confirmed.

BitClave launched its ICO in 2017, offering its Consumer Activity Token (CAT) to investors. The startup quickly raised around $25.5 million by selling the tokens to nearly 9,500 investors. However, the SEC filed a lawsuit against BitClave in 2020, accusing the company of violating securities laws by failing to register the ICO as a digital asset security.

Though BitClave did not admit to any wrongdoing, it reached a settlement with the SEC. As part of the settlement, the company agreed to return the full $25.5 million raised during the ICO. Additionally, BitClave was required to pay $3.4 million in pre-judgment interest and a $400,000 fine. The company also agreed to destroy its remaining supply of 1 billion uncirculated CAT tokens and delist the token from exchanges.

To ensure the affected investors were compensated, the SEC ordered BitClave to establish a Fair Fund. The fund’s purpose was to facilitate the return of funds to those who had participated in the ICO. Investors who wished to claim their share had to submit claims by August 2023, with notifications sent out in March 2024 regarding the status of their claims.

Initially, BitClave committed to contributing $29 million to the SEC’s Fair Fund for investor compensation. However, by February 2023, only $12 million had been allocated, according to SEC documents detailing the distribution process.

This case adds to a growing list of legal actions the SEC has taken against crypto firms over the past few years. Notable companies like Ripple Labs, Binance, and Coinbase have also faced scrutiny for allegedly conducting unregistered securities offerings and engaging in fraudulent practices.

As reported earlier in 2024, law enforcement agencies settled eight major crypto-related lawsuits, totaling $19.45 billion by October. The value of settlements in 2024 has already surpassed that of the previous year, showing a 78.9% increase compared to 2023.