- The SEC has accused Enigma of misleading investors
- In the claim, the $45 million ICO the company raised is now in jeopardy
- Enigma will now need to register its token as securities.
The SEC has forced crypto project Enigma to return the funds raised in a $45 million ICO in 2017 to harmed investors. It has also charged the project $500,000 for selling unregistered securities.
Enigma is a project focused on providing privacy for decentralized applications (dapps).
“All investors are entitled to receive certain information from issuers in connection with a securities offering, whether it involves more traditional assets or novel ones,” said John T. Dugan, associate director for enforcement in the SEC’s Boston Regional Office, in a statement. “The remedies in today’s order provide ICO investors with an opportunity to obtain compensation and provide investors with the information to which they are entitled as they make investment decisions.”
Enigma will now need to register its tokens as securities, and file periodic reports with the SEC.
Enigma looks past SEC charges
While this might be a blow for the nascent project, it seems more like a relief.
"This settlement clears the way for our development team to focus fully on our original and continued vision: building groundbreaking privacy solutions that improve the adoption and usability of decentralized technologies, for the benefit of all," Enigma CEO Guy Zyskind wrote in a blog post.
Enigma is now focusing on its newly launched mainnet. Enigma's mainnet, which went live on February 13, is a proof-of-stake blockchain based on Cosmos—a project that has been falling apart in recent weeks.
The blockchain will support Enigma's new cryptocurrency, called Secret (SCRT). It is used for governance on the blockchain, enabling token holders to decide how it adapts over time. They can also stake Secret tokens, locking them up for periods of time in order to receive certain benefits.
However, the main thing that Enigma is focused on, is not yet ready. It's secret sauce is the notion of "secret contracts" that allow dapps to function without anyone being able to observe them. The aim is to bring greater privacy to the cryptocurrency world.
And, according to our latest feature, that is sorely needed.