SEC Charges Data Storage Company for Unregistered Offering
Sept. 30, 2019
File No. 3-19569
September 30, 2019 - The Securities and Exchange Commission today announced settled charges against Nebulous, Inc., a Boston, Massachusetts company that develops decentralized cloud-based data storage technology, for raising $120,000 through the offer and sale of securities without registration or an applicable exemption.
According to the SEC's order, in mid-2014, Nebulous publicly announced its plan to offer and sell "Siastock." Nebulous said it planned to use the proceeds from the offering to develop a decentralized cloud storage network called Sia. Holders of Siastock would be entitled to receive a percentage of future revenue generated from transactions on the Sia network. Days after its announcement, Nebulous began offering "SiaNotes," which it described as instruments that would be convertible to Siastock upon the future launch of the Sia network. Nebulous sold 1,250 SiaNotes at an average price of $96, thereby raising $120,000. In late 2014, Nebulous changed the name of its Siastock to "Siafunds," and in early 2015 Nebulous announced that it would exchange Siafunds for SiaNotes. By mid-2015, Nebulous had exchanged Siafunds for 1,189 SiaNotes. Nebulous did not file registration statements with the Commission prior to offering Siastock, Siafunds, or SiaNotes, and no exemption from registration applied to their offers or sales.
The SEC's order finds that Nebulous violated the registration provisions of Sections 5(a) and (c) of the Securities Act of 1933. Without admitting or denying the SEC's findings, Nebulous consented to a cease-and-desist order and agreed to pay disgorgement of $120,000, prejudgment interest of $24,601, and an $80,000 civil money penalty.
The SEC's investigation was conducted by Peter Bryan Moores, Colin D. Forbes, and Celia D. Moore of the SEC's Boston office.