The Securities and Exchange Commission settled charges against a Brighton Massachusetts based blockchain company SimplyVital Health, Inc. for offering and selling approximately $6.3 million of securities to the public in unregistered transactions.
According to the SEC Cease and Desist Order Simply Vital in late 2017, SimplyVital Health, Inc. publicly announced its plan to conduct a token sale-an “Initial Coin Offering” or “ICO”-to raise money to further its development of Health Nexus, a “healthcare-related blockchain ecosystem.” SimplyVital offered a new token called Health Cash, or HLTH, which, it stated, would be used as currency in the Health Nexus. SimplyVital concurrently announced that it would conduct a “pre-sale” of its HLTH tokens, in which it offered investors Simple Agreements for Future Tokens, or SAFTs, under which it sold HLTH tokens that would not be delivered to investors unless and until created by SimplyVital. The order finds that SimplyVital did not file a registration statement with the Commission or qualify for an exemption from registration before offering and selling HLTH to the public through the SAFTs.
According to the SEC’s order, SimplyVital raised approximately $6.3 million from its unregistered sale of securities in between September 2017 and April 2018. After concluding its pre-sale in April 2018, SimplyVital ultimately decided not to offer and sell HLTH during its scheduled ICO. In 2019, SimplyVital voluntarily returned to investors substantially all of the funds raised during its pre-sale. Simply Vital is a new kind of healthcare company which seeks to enhance patient well being through better communication of patient information. Its platform is a bit complicated, so for more information read the following White Paper:
The SEC’s order finds that SimplyVital violated the registration provisions of Sections 5(a) and (c) of the Securities Act of 1933. Without admitting or denying the SEC’s findings, SimplyVital consented to a cease-and-desist order.
The SEC’s investigation was conducted by Michael Vito, Peter Bryan Moores, and Celia D. Moore of the SEC’s Boston office.
The Securities and Exchange Commission (SEC) filed an Administrative Proceeding earlier this week regarding an initial coin offering (ICO) affiliated with SimplyVital Health – a company that pursued an ICO in late 2017 and early 2018. The SEC claims that SimplyVital sold unregistered securities. SimplyVital apparently sold “Health Cash” tokens (HLTH) in a crowdfunding round. The plan was to create 200 million HLTH tokens with a presale offering 40 million tokens to investors in a SAFT.
The SEC has now settled with the company.
A document posted on the SimplyVital Health website states the settlement with the SEC now allows management to “refocus on developing blockchain-based solutions to emerging value-based healthcare programs.”
CEO Kat Kuzmeskas stated:
“We are pleased to put this matter behind us and are looking forward to the next stage in SVH’s evolution. Recently, SVH launched its “sana” services design with the goal of enabling physicians participating in the Centers for Medicare and Medicaid Services value-based care program to provide improved care while minimizing financial penalties.”
According to the SEC filing:
“In total, from September 25, 2017, to April 3, 2018, SimplyVital raised more than 15,200 ETH (equivalent to approximately $6.3 million USD as of April 3, 2018) from 52 individuals or ICO pools who invested through the company’s pre-sale. Of the more than 15,200 ETH raised, at least 13,800 ETH (more than $5.2 million USD) came from purchasers with whom the company had not taken reasonable steps to verify accredited investor status.”
In January of 2019, SimplyVital announced it would not issue the HLTH tokens and all funds would be returned to investors. This decision came following outreach from the SEC staff.
The SEC reports that substantially all of SimplyVital’s assets have been returned to investors.
Importantly, the SEC has decided not to impose a civil penalty, in light of the actions taken by the firm.