Startup Wireline will pay the SEC $650,000 as part of a settlement involving the illegal sale of $16.3 million worth of tokens in 2018 through a Simple Future Token Agreement (SAFT).
The US Securities and Exchange Commission (SEC) settled a case with the startup Wireline, which creates microservices based on the blockchain, about the illegal sale of tokens worth $16.3 million at the end of 2018. Wireline has not registered a Simple Future Token Agreement (SAFT) with the SEC. According to the terms of the settlement, the company is prohibited from transferring tokens to investors and must notify them of this.
The SEC’s prosecutors said that SAFT Wireline is an investment contract and therefore subject to regulatory oversight. SEC Commissioner Hester Peirce agreed with the SEC’s actions against the Wireline proposal. She said that Wireline tokens should not be distributed to investors, as they could potentially harm innovation in cryptocurrencies.
“This settlement perpetuates an approach that assumes that tokens are securities. This complicates the development of cryptocurrency networks, ” she said in a statement.
A Simple Future Token Agreement (SAFT) is an investment contract offered to accredited investors by cryptocurrency developers who promise to provide a certain number of tokens when the network is launched. Back in 2018, the Financial Institutions Regulatory Agency (FINRA) warned investors about the dangers of the SAFT model.