SEC Approves $4.6 Million Payment to Investors Affected by BitClave’s Crypto ICO

The US Securities and Exchange Commission (SEC) has confirmed the distribution of more than $4.6 million to investors affected by blockchain startup BitClave’s unregistered initial coin offering (ICO).

Funds will be paid out of the BitClave Fair Fund after a notice and claims process.

BitClave’s $29M ICO Liquidation

“The checks are in the mail. We are sending more than $4.6 million to investors harmed by BitClave, PTE Ltd.’s unregistered ICO of digital asset securities,” the SEC shared in a post on X.

BitClave was a blockchain-based startup that wanted to change the digital advertising industry by creating a decentralized search engine that would cut out middlemen like Google AdWords, allowing businesses to connect directly with consumers.

To raise funds, the project launched an ICO in 2017, selling its native Consumer Activity Token (CAT). The event was a massive success, raising over $25 million from nearly 9,500 investors in less than a minute.

However, BitClave’s dream soon came crashing down when, in 2020, the SEC sued the project, alleging that its ICO had violated federal securities laws. The company later settled the charges, agreeing to return all money collected but not admitting wrongdoing.

Adding interest and penalties, the amount owed to the SEC was about $29 million, intended to be returned to investors.

Notice and claims process

On December 1, 2022, the agency’s Division of Enforcement published a Notice of Proposed Fair Fund Distribution Plan. It approved the proposal, which included a detailed methodology for distributing the fund and accrued interest to investors, on February 9, 2023.

Investors eligible for compensation were required to file claims by August 2023 and were notified by the SEC of the acceptance or denial of their claims in March 2024.

Following the Fund Manager’s submission of a payment file, it was reviewed and accepted by the SEC. According to the latest filing, the regulatory body has authorized the transfer of $4.6 million from the Fair Fund to an escrow account, which will be distributed according to the approved plan.

Interestingly, while BitClave agreed to pay $29 million to the SEC’s fund as part of the settlement, the company appears to have paid only $12 million. The money the regulator will free up means another $7.4 million remains, and there is no current word on what will happen.

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