‘Independent’ blockchain coin rater was paid for reviews, SEC says
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Buying cryptocurrency can be confusing for investors who are inexperienced in the highly technical field.
But blockchain-based "coins" have received a lot of interest in the past few years, thanks largely to the success — and sometimes rapidly changing value — of bitcoin, attracting new investors looking for advice.
One website that billed itself as "a rating agency that issues independent analytical research" about these digital assets, ICO Rating, illegally took payments from some of the groups issuing the initial coin offerings it rated without letting consumers know, according to the Securities and Exchange Commission.
While ICO Rating was based in St. Petersburg, Russia, it published all its content in English and listed figures in U.S. dollars, according to the SEC. It also hosted and sent employees to conferences in the U.S.
The website had claimed "to help the market achieve the necessary standards of quality, transparency and reliability," while it took payments for publishing reviews between December 2017 and July 2018, officials said. ICO issuers paid the company more than $100,000 for the publicity.
ICO Rating agreed to stop the practice and pay more than $268,000 to settle charges that it failed to disclose payments received from issuers for publicizing their digital asset securities offerings, the SEC said.
"The securities laws require promoters, including both people and entities, to disclose compensation they receive for touting investments so that potential investors are aware they are viewing a paid promotional item," said Melissa Hodgman, associate director of the SEC’s enforcement division. "This requirement applies regardless of whether the securities being touted are issued using traditional certificates or on the blockchain."
ICO Rating’s website was not online as of Wednesday.