The United States Securities and Exchange Commission issued a financial penalty against the Russian-based ICO Rating for not disclosing internal information to the public. Apparently, ICO Rating received financial aid to promote ICO projects but failed to communicate with the public.
Ironically, ICO Rating claims to be “a rating agency that conducts independent analysis and research.” The company also believes in the idea of “helping the cryptocurrency market to achieve transparency, quality, and reliability.”
ICO Rating violated the anti-touting laws of the Securities Act of 1933, where all promoting services, whether done by individuals or companies, have to be disclosed with information about the compensation the entities received to tout investments.
“Investors have to be aware that they are viewing some ICO projects as promoted material, rather than believing all entries are equal, ” states Melissa Hodgman, SEC’s associate director in the Enforcement division.
The company did not officially make an announcement about their position in regards to SEC’s claims. Despite that, ICO Rating agreed to clear-out the money they received from ICO projects ($106,998) and will pay a civil penalty of $162,000.
The non-disclosed touting of ICO projects is certainly not a new game. BreakerMag conducted research in October 2018, and their research outlined that over half of the crypto news outlets receive funds for promoting and advertising ICO projects without disclosing the fact they got paid to do so. Large media outlets such as NewsBTC and Bitcoinist admitted to exercising such practices in Baker’s research.
Celebrities also suffered from SEC’s monitoring. Floyd Mayweather and DJ Khaled got penalized for not disclosing the accepted amount for paid promotion of ICO projects.