Russian “ratings” firm ICO Rating pitched itself as “a rating agency that issues independent analytical research” on blockchain-based digital assets. It promulgated a mission of helping “the market achieve the necessary standards of quality, transparency, and reliability.”

As it turns out, though, ICO Rating was hiding something — namely, that it was being paid by issuers of digital tokens to promote their securities offerings through research and ratings it published on its website.

Between December 2017 and July 2018, according to charges filed by the Securities and Exchange Commission on Tuesday, ICO Rating charged entities a fee to rate, produce, and publish research reports regarding initial coin offerings and to publicize the reports and ratings via social media channels.

ICO Rating was paid $100,572, directly or indirectly, by certain issuers whose ICO projects it rated and publicized. Most importantly, though, ICO Rating did not disclose those payments.

Since the SEC considers digital coins (also called “tokens”) securities, ICO Rating therefore violated the anti-touting provisions of Section 17(b) of the Securities Act.

“The securities laws require promoters, including both people and entities, to disclose compensation they receive for touting investments so that potential investors are aware they are viewing a paid promotional item,” said Melissa Hodgman, associate director of the SEC’s enforcement division.  “This requirement applies regardless of whether the securities being touted are issued using traditional certificates or on the blockchain.”

Without admitting or denying the SEC’s findings, ICO Rating agreed to cease and desist from committing or causing any future violations of the anti-touting provisions, and to pay disgorgement and prejudgment interest of $106,998 and a civil penalty of $162,000.

ICO Rating is based in St. Petersburg, Russia, and formerly claimed to maintain additional offices in New York, Amsterdam, and Singapore, said the SEC.

On Wednesday, ICO Rating’s website was offline.

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