The U.S. Securities and Exchange Commission (SEC) ordered Tierion to pay back investors in its TNT tokens after finding the data verification startupâ€™s $25 million initial coin offering (ICO) violated securities laws.
TNT holders and ICO investors who sold their tokens at a loss have 60 days to ask Tierion for what is essentially a refund â€“ at cost, plus interest. Node operators can sell their compensatory TNT back to Tierion for .01 cent plus interest.
Tierion must immediately disable trading of its ERC-20 token, which runs on the Ethereum blockchain, under the settlement disclosed Wednesday. It will pay the SEC $250,000 in penalties. Tierion did not admit or deny wrongdoing, according to the SEC. The SEC also issued Tierion a Reg D waiver, meaning it wonâ€™t have to register future private placements of securities because it cooperated.
The order effectively blows up 1 billion TNT tokens. At the time of its 2017 ICO, Tierion pitched them as the â€œmethod of settlementâ€ between users of its data verification network, the â€œChainpoint protocol,â€ and an â€œincentiveâ€ to secure the network. The order said Tierion sold 350 million TNT to 4,800 investors.Â
But Tierion, which at one point had buy-in from the likes of Microsoft, plans to continue without TNT. Founder and CEO Wayne Vaughn told CoinDesk in a text message the settlement allows Tierion â€œto move forward without a heavy regulatory burden.â€ He framed TNTâ€™s demise as the token going into â€œretirement.â€
â€œThis announcement does not impact the availability of Tierionâ€™s current products or open-source software,â€ Tierion said in a Medium post.