- The SEC has begun reimbursing investors defrauded by BitClave’s unregistered 2017 ICO, marking progress in a $29M settlement plan.
- The Fair Fund, set up to compensate investors, will distribute its balance after deductions for taxes, fees, and expenses, as per SEC guidelines.
The U.S. Securities and Exchange Commission (SEC) has initiated the reimbursement process for investors affected by the failed blockchain project BitClave, nearly two years after announcing its plans. The decision follows a lengthy legal battle over the company’s unregistered initial coin offering (ICO).
BitClave, a now-defunct startup, had raised $25.5 million in 2017 through the sale of Consumer Activity Tokens (CAT), drawing thousands of investors in a short period. However, in 2020, the SEC alleged that the fundraising violated federal securities laws. To settle the lawsuit, BitClave agreed to repay the funds raised, along with a $4.6 million penalty.
The total amount BitClave was ordered to pay, including fines and disgorgements, was approximately $29 million, which was deposited into the BitClave Fair Fund. This fund, overseen by the SEC, was established to distribute recovered sums to defrauded investors. However, reports from earlier this year indicated that only $12 million had been secured in the account, raising questions about the full payment’s status.
According to SEC Secretary Vanessa Countryman, the reimbursement plan includes distributing the Fair Fund’s balance, along with accumulated interest, minus applicable taxes, fees, and expenses. The methodology for these distributions was detailed in the SEC’s official filing. Investors who submitted claims by August 2023 were notified of their eligibility in March and can now expect compensation.
The SEC’s lawsuit against BitClave was part of a broader crackdown on ICOs led by former SEC Chair Jay Clayton during the 2017-2018 cryptocurrency boom. Under Clayton’s leadership, the SEC pursued cases against major crypto projects such as Ripple, Telegram, and Kik, alleging violations of federal securities laws.