ETHERLive
ETHERLive delivers real-time price and volume data across 16+ exchanges to users in a clear and easy-to-understand package. Users can get up-to-the-second updates for each exchange/currency pair, as well as aggregated market averages for each exchange, currency, and the market as a whole. It also provides a global converted average of all the currency pairs monitored by ETHNews, converted to USD.

---

24hr ---
--%
Tuesday Aug 21st 2018
RESOURCES

The Basics

Learn the basics of Ethereum and various cryptocurrency technologies

Learn More

What is Ethereum?

Understand the underlying principles of the Ethereum Platform

Learn More

The Blockchain

Discover the revolutionizing technology known as the blockchain

Learn More
SUBMIT

Press Release

Submit a press release for consideration on ETHNews

Submit Press

Story / Dapp

Submit a story or DAPP to be considered for publication on ETHNews.

Submit Story

Explanation

Submit "Ethereum Explainer" content for consideration to be featured on ETHNews

Submit Topic
ETHNews Logo
---
--%
Home
News
Etherlive
Ether Price Analysis
Resources
Contact Us

Protostarr Shuts Down After Contact From SEC

By

Jordan

Daniell

WriterETHNews.com

The U.S. Securities and Exchange Commission (SEC) contacted Protostarr regarding its token offering. While details about the conversation remain foggy, Protostarr has announced a total refund.

On August 24, 2017, Protostarr, the internet celebrity crowdfunding platform, was contacted by the SEC. Protostarr then consulted with attorneys, and thereafter decided to cease operations.

Per Protostarr’s press release: “we were contacted by the United States Security and Exchange Commission regarding the initial coin offering of Protostarr tokens to fund the development of our Ethereum decentralized application. After consultation with multiple lawyers, we have decided to cease further operations and refund Ethereum collected in our crowdsale that began on August 13, 2017.”   

The Protostarr token offering had raised 119.5 Ether, or nearly $50,000. The company will start issuing refunds  on September 2, 2017, for every incoming crowdsale transaction made before the refund date.

About a month ago, the SEC issued a report concerning The DAO, concluding that The DAO tokens were securities. Many in the crytpocommunity immediately started questioning the future of token offerings. Protostarr’s closure is the latest sign that the token offering phenomena may be slowing down. The SEC has not issued any statement about Protostarr, and Protostarr’s press release did not explain what the federal regulators said, but safe to say Protostarr’s token offering was probably a security and the token offering was conducted in violation of the securities laws.

Protostarr explained that as a startup it does not have sufficient resources to challenge the SEC: “Like many of our supporters , we were excited to be an innovative force in the emerging space of content creation and its funding. Unfortunately, as a startup, we do not have the necessary resources to both develop our DApp and challenge the SEC’s investigation regarding our ICO and its interpretation under US securities law.”

Protostarr chief executive, Joshua Gilson, further explained on a popular online forum: “Thanks for understanding. We are just working on making sure all refunds are handled properly so no one loses any money. At least ETH is worth more now than it was during the campaign so everyone is getting more value back than they donated. It is unfortunate though. We feel we had a novel idea that can help a lot of people, but because ICO’s are now on the SEC’s radar we would have to get a legal department hired on earlier than the plan, which we can’t afford to do while giving value to those who supported us. We are losing all the money we put into this, but want to make sure our supporters are taken care of. We will live and learn and start pushing forward as a team.”

The sheer amount of funds raised in 2017, around $1.2 billion, has begun to force the hand of federal regulators into playing a more active role in overseeing the cryptocurrency ecosystem’s favorite fundraising mechanism. Although further clarification of the securities laws as applied to the new asset class would be helpful, many startups with token offerings should start reading between the lines as to what happened with Protostarr and take appropriate steps.

Jordan Daniell

Jordan Daniell has a passion for techno-social developments and cultural evolution. In his spare time, he enjoys astronomy, playing the bagpipes, and exploring southern California on foot. Jordan holds value in Ether.

ETHNews is committed to its Editorial Policy

Like what you read? Follow us on Twitter @ETHNews_ to receive the latest Protostarr, SEC or other Ethereum law and legislation news.