Gladius Network shuts down as ICO investors cry foul

By Jaime Chacon

The Gladius Network, a cybersecurity company that raised nearly $13 million in an ICO in late 2017, has shut down. The company’s co-founder and CTO, Alex Godwin, made the announcement over the weekend via the firm’s official Telegram channel.

“We regret to inform you that Gladius Network LLC has ceased operations effective immediately and has filed for dissolution,” Godwin said in a statement signed by the “Gladius Team.” The company, which earlier this year settled with the SEC over its unregistered ICO and agreed to repay its investors, has run out of money despite its “best efforts,” Godwin said.

The denial-of-service (DoS) attack solution project plans to keep its open-source software that it has developed available on GitHub for the next three months, according to firm’s statement. But what Godwin and the rest of the Gladius team did not say is whether investors can ever expect to get their money back—and if so, when. Attorneys for Gladius did not immediately respond to Decrypt’s request for comment.

In February, Gladius became one of a trio of high-profile ICO-funded crypto startups to settle with the SEC over the alleged sale of unregistered securities, following in the footsteps of Airfox and Paragon. Gladius’s agreement with the SEC required the unregistered ICO issuer to return funds to investors who requested a refund by filing a claim. Gladius was also to register its Ethereum-based GLA tokens as securities with the Commission.

The settlement also saw Gladius avoid any further civil penalties because the firm took the proactive step to self report to the SEC, according to the Commission’s statement at the time. However, since that time, Gladius has asked for and received several deadline extensions to register its token as a security with the SEC, according to a recent report from the Wall Street Journal.

It appears that the most recent deadline of November 18, just a week before Gladius abruptly shut down, also went unmet. A spokesperson for the SEC declined to comment.

Community members on Reddit have been critical of how the company has spent its funds over the last two years. Users who claim to be investors say they’ve yet to receive the refunds they’ve requested as required by the SEC settlement. Meanwhile, the company has either shut down or muted their online media platforms, and concerned investors have created a new Telegram group to discuss legal options and determine how to recoup their stake in the defunct project.

Additional reporting by Guillermo Jimenez.

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