Gladius Network dissolves nine months after settling with the SEC

Gladius Network is shutting its doors according to an announcement made by Co-Founder and CTO Alex Godwin. The Ethereum-based denial-of-service (DoS) protection startup raised $12.7 million in ETH in a late 2017 initial coin offering (ICO), which drew the ire of the U.S. Securities and Exchange Commission (SEC). Gladius self-reported its unregistered securities sale and later settled with the government agency in Feb. 2019. Faced with refunding disgruntled ICO investors and registering its token as a security, Gladius missed several SEC deadlines (though it received multiple extensions) before opting to wind down operations.

Why it matters:

• Show me the money: according to Decrypt, self-proclaimed Gladius Network investors say they have yet to receive any refunds. Despite the SEC’s lenient approach monitoring Gladius’ adherence to the agreement, the government agency may not take this matter as lightly. Affected investors are already convening in Telegram groups to discuss potential avenues of recourse.
• Gladius joins the laundry list of projects to get nipped by the SEC over the last year. But Gladius’ fate starkly contrasts that of Block.one and its EOS network, who wrote a $24 million check to the SEC for its unregistered $4.1 billion token sale. The reality is smaller projects will not have the funds to swindle their way out of being labeled as a security, a death knell for almost all utility token projects.