Unregistered ICO Issuer Gladius Shuts Down 9 Months After SEC Settlement

Crypto startup Gladius Network LLC announced it would close its operations via a Telegram message on Thursday, several months after settling charges of selling an unregistered security with the U.S. Securities and Exchange Commission (SEC).

The Washington D.C.-based firm reached a settlement with the SEC in February over its 2017 initial coin offering. As part of the settlement, Gladius was supposed to refund investors who participated in the $12.7 million sale. The regulator said it would not impose any penalty on Gladius because the firm self-reported the token sale. 

As part of the settlement, Gladius was required to file a registration statement by May 20, 2019, according to the Wall Street Journal. While the deadline was extended to Nov. 18, it is unclear whether the company actually filed the statement.

“Despite our best efforts, the company no longer has funds to continue operations,” the firm said in the announcement last week. “We regret to inform you that Gladius Network LLC has ceased operations effective immediately.” 

The company plans to leave its code on GitHub for the next three months, allowing anyone who is interested to work on their own version of the project.

“We still believe in the power of our technology, and if anyone in the community is interested in pursuing it we welcome it,” Gladius said. 

Gladius started to sell its GLA tokens in exchange for ether in October 2017, and aimed to incentivize people to use its network. The firm raised nearly 24,000 ETH when it completed the token sale in December that year, according to a press release from the SEC. 

In November 2018, the SEC charged two crypto startups – CarrierEQ Inc., also known as Airfox, and Paragon Coin Inc. – with violating security registration requirements for their ICOs. 

The two firms later agreed to register the ICOs as securities after settling these charges. The regulator said Airfox and Paragon Coin are among the first cases “imposing civil penalties solely on securities offering registration violations. (The Journal reports that both companies failed to pay the fines on time, though Airfox claims its deadline was extended through the end of December.)