SEC reaches settlement with the firm behind Sia Network

Quick Take

  • Nebulous Inc. is the development firm behind the Sia decentralized cloud storage network
  • The firm has reached a settlement with the SEC regarding the sales of two financial products it offered in 2014 and 2015

Nebulous Inc., the firm behind the Sia decentralized cloud storage network, has entered a settlement agreement with the U.S. Securities and Exchange Commission (SEC).

According to an SEC filing, in 2014 and 2015, Nebulous "offered and sold securities that were required to be registered with the Commission." The SEC claims that Nebulous violated the Securities Act "by offering and selling these securities without a registration statement filed or in effect with the Commission and without qualifying for exemption from registration."

The securities cited by the SEC were Nebulous' 2014 "Siastock" offering which entitled owners to "a percentage of future revenue generated from transactions on the Sia network and user application Nebulous represented it was then developing" and the "SiaNotes" which represented a 'promise of future payments.' 

As part of the settlement, Nebulous has agreed to pay penalties and disgorgement of approximately $225,000. According to Nebulous, "As reflected in the settled order, the SEC did not take any enforcement action with respect to the Siacoin token or any current activity on the Sia network, and the order does not require Nebulous to register the Siacoin token as a security with the SEC."

In a statement sent to The Block, Zach Herbert, Nebulous' COO, said "While disappointed that the SEC chose to pursue a steep penalty of almost double what we raised in our 2014 offering of Siafunds, especially compared to their lax handling of EOS, we view this settlement as highly positive for Sia. By choosing not to take action against Siacoins, we believe the SEC has validated Sia’s two-token model. We will continue to build and improve the Sia network at a rapid pace.”

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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Oct 15, 2021, 2:54AM UTC