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The U.S. Securities and Exchange Commission has settled charges against Nebulous, the company behind the decentralized cloud-storage network Sia, according to a statement from the SEC published yesterday.
Nebulous allegedly conducted an unregistered securities offering in 2014 that raised just over $120,000 through the sale of financial instruments known as SiaNotes. (SiaNotes, according to the SEC's order, were to be later converted into Siafunds—the company's blockchain-based, revenue-share tokens.)
As part of its settlement, Nebulous has agreed to forfeit the $120,000 raised in the sale, as well as additional $100,000 in civil penalties and interest.
The SEC’s enforcement action against Sia follows a controversial settlement with EOS issuer Block.one. The firm hosted an ICO in 2017 that purportedly raised $4 billion, yet the SEC settled with Block.one for about one half of one perfect of the total raise—$24 million.
Notably, the action against Sia marks a departure from the SEC, which has up to now primarily sought to come after ICOs that were conducted after the Commission issued its DAO Report in July 2017.
“We were disappointed that the SEC chose to take action with respect to the relatively small offering conducted years before we have the benefit of guidance,” Nebulous COO Zach Herbert said in a statement. “However, we are pleased at how the company and the network fared under such intense regulatory scrutiny.”
Unlike Block.one, most crypto startups that the SEC has targeted haven’t been so lucky. One such example is Kik, the Canada-based messaging app company currently embroiled in a $100 million lawsuit with the SEC over the 2017 ICO that launched Kin. The company recently opted to shut down the Kik app in a bid to keep its Kin cryptocurrency alive and continue to fight the SEC.
Editor's note: An earlier version of this story incorrectly referred to SiaNotes as tokens, rather than financial instruments that were later to be converted into tokens. We regret the error.