SEC closes BitClave chapter, distributes $4.6M to victims

The US Securities and Exchange Commission (SEC) announced that it has begun distributing $4.6 million to investors of BitClave’s infamous 2017 ICO. This payout comes out from a fair fund created after a 2020 settlement with the now-defunct crypto startup.

BitClave raised $25.5 million in just ninety seconds during the ICO boom by selling Consumer Activity Tokens (CAT). However, the commission charged it for conducting an unregistered securities sale later in 2020. 

SEC sends $4.6M to BitClave victims

As part of the settlement, BitClave agreed to return the $25.5 million it raised from the ICO, pay $4 million in penalties, destroy uncirculated CAT tokens, and delist the asset. This cumulatively stands at $29 million allocated to a fair fund.

Despite a $29 million pledge, SEC records show BitClave paid only $12 million as of early 2023. However, it has disbursed $4.6 million among the users but $7.4 million is still missing from the fund. The SEC hasn’t clarified the discrepancy. 

A notice shared by the SEC shows that the board advised all persons desiring to comment on the proposed plan to submit their comments. The commission didn’t receive any negative comments on the plan, so it moved forward.

Will the SEC explain the missing funds?

The plan directed the distribution of the fair fund with the accumulated interest and asked to cut short the taxes, fees, and expenses. The claims bar date then passed all submitted claims and informed the SEC.

Despite BitClave’s obligations, SEC records revealed that only $12 million was paid into the fund by February 2023. This leaves around $7.4 million unaccounted for with no explanations from the commission yet.

As per the process, claimants submitted applications by August 2023 and the final notifications were issued in March 2024. The recent disbursement marks progress but questions linger over unresolved fund discrepancies. Meanwhile, this case highlights the SEC’s ICO-era enforcement push and investor protection mandate.

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