The US SEC has reached a settlement with crypto company Quantstamp, concluding a legal saga revolving around alleged violations of securities laws.

The settlement, agreed upon by Quantstamp, entails specific terms and financial implications, shedding light on the regulatory landscape that governs the crypto industry.

Quantstamp, the crypto firm in question, has settled with the SEC in response to charges related to securities law violations.

The charges were levied against the company in connection with its Initial Coin Offering (ICO) that took place during October-November 2017. While Quantstamp has agreed to the settlement, it has neither admitted nor denied the charges.

Part of the settlement entails Quantstamp consenting to a cease-and-desist order. In addition, the company has agreed to disgorge a sum of $1,979,201, coupled with prejudgment interest amounting to $494,314. Furthermore, Quantstamp is obliged to pay a civil penalty totaling $1 million.

During its ICO, Quantstamp raised an impressive sum of over $28 million by selling its native token, QSP, to nearly 5,000 investors, including individuals based in the United States.

The SEC contends that the QSP tokens should be classified as securities according to the Howey test, a legal framework to determine whether a transaction involves an investment contract.

The SEC argues that Quantstamp’s failure to register these tokens violated federal securities laws. The company’s ICO was centered around its role as an automated smart contract security auditing platform.

The SEC alleges that Quantstamp promoted its platform’s substantial potential during the ICO, creating an environment where investors believed that the QSP tokens held the promise of significant value appreciation.