Three cryptocurrency startups have missed deadlines to refund investors who participated in their illegal digital token sales, the Wall Street Journal (WSJ) reports.
The companies, which raised a combined $40 million during 2017’s cryptocurrency bull run, agreed on the deadlines as part of their settlements with the US Securities and Exchange Commission (SEC). As a result, they were given reduced fines.
Airfox, which offers mobile banking services in developing countries, and Paragon Coin Inc, which applies blockchain tech to the cannabis industry, both agreed to pay $250,000 each after settling with the SEC in November last year.
Gladius Network LLC, did not pay a penalty when it settled and the SEC gave it credit for self-reporting its violations.
In order to comply, the businesses were asked to file a registration statement, an official document overseen by the SEC that seeks to inform investors of potential risks, trends, and financial performance.
However, Paragon did not reply to the SEC‘sletter containing follow-up questions about its shareholder rights and accounting. Gladius’ was expected to file its registration statement by May 20, but it says on its website that the deadline was extended until Nov, 18. An attorney for the company declined to comment after being contacted by the WSJ.
Airfox and Paragon were due to refund investors by October 16, but didn’t. Airfox claims it was given an extension until December 28.
Paragon, whose original deadline was in July, says on its website that investors seeking refunds have until November 21 to file their claims. The company didn’t respond to the WSJ’s request for comment, and neither did an attorney who represented it before the SEC.
The WSJ says that SEC filings show that Airfox owes as much as $15.4 million to investors and has $6.1 million in current assets.
Paragon disclosed current assets of $95,659 and current liabilities of $14.9 million, according to figures for 2018 submitted to the SEC. It plans to generate additional cash by selling a building in Los Angeles and raising further capital from investors.