The Securities and Exchange Commission has settled a case against a cybersecurity startup company, which was charged with conducting an unregistered initial coin offering (ICO).

Gladius Network LLC escaped without any rigorous punishment because the irregularity was self-reported by the company to the regulator.

The Washington, D.C.-headquartered Blockchain based DDoS mitigation and content delivery network agreed to offer refunds to investors who purchased millions of dollars worth of its digital tokens after regulators alleged the sale broke laws meant to inform them about business risks.

Gladius raised $12.7 million in digital assets in an ICO set in late 2017 to finance its plan to develop a network for renting spare computer bandwidth to defend against cyberattacks and enhance delivery speed.

SEC noted that Gladius did not register its ICO under the federal securities laws.

The Securities watchdog said it did not impose a penalty because the company self-reported the conduct to the SEC’s Enforcement division, agreed to compensate investors, and will register the tokens as a class of securities, as required by the Securities Exchange Act of 1934.

Pointing out the benefit of self-reporting and taking proactive steps to remediate unregistered offerings,chief of the SEC’s Cyber Unit Robert A. Cohen insisted that companies must comply with the securities laws when issuing digital tokens that are securities.

The startup that helps clients fight off cybersecurity attacks agreed to file required periodic reports with the Commission. “Gladius consented to the order without admitting or denying the findings,” SEC said in a press release.

The SEC has previously settled unregistered securities charges against crypto startups Airfox and Paragon Coin, but this is for the first that that it is using the phrase “unregistered ICO.”

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