Quantstamp, a blockchain security firm, has been ordered by the U.S. Securities and Exchange Commission (SEC) to return $28 million raised in a 2017 unregistered initial coin offering (ICO). The SEC accused Quantstamp of conducting an unregistered ICO, during which they sold their native QSP tokens to approximately 5,000 investors for developing Ethereum blockchain technology. After the ICO, Quantstamp allowed its tokens to be traded on third-party platforms without registering the issuance and sale. As a result, Quantstamp has agreed to settle the charges by disgorging proceeds from the offering and paying a civil penalty of nearly $2.5 million. The firm will establish a “Fair Fund” to compensate affected investors, transferring its QSP token holdings to the administrator of the fund.
Quantstamp is a security-auditing protocol that focuses on addressing smart contract security concerns on the Ethereum blockchain. The project aimed to establish a distributed network of participants to counteract bad actors, facilitate governance, and offer computing power. Participants play a vital role in using QSP tokens for various purposes, according to Quantstamp’s whitepaper.
The SEC alleged that purchasers of QSP tokens had a reasonable expectation of profit from Quantstamp’s efforts, leading to accusations against the company. Despite filing for exemptions, the SEC found that Quantstamp failed to register the offers and sales of QSP tokens, which were deemed securities. After the settlement, Quantstamp will no longer operate or provide its services.
The price of the Quantstamp token has experienced a significant decrease from its all-time high, currently at $0.0115 per QSP.