The SEC has settled with another coin for an unregistered securities offering.

Nebulous, a Boston-based company behind the Sia network – a decentralized cloud storage company, has agreed to pay $225,000 as penalty for conducting an offering worth $120,000 for SiaNotes, a token it intended to develop for purchase and sale of storage space on its network in 2014.

The SEC’s order points out several red flags in Nebulous’ 2014 offering. For example, it did not bother with KYC laws and failed to ascertain the identity or accreditation status of investors in the offering. It also did not restrict transfers of the token or prevent the development of a resale market for the tokens. “Nebulous directed potential investors who missed Nebulous’ offering to buy SiaNotes from purchasers who were re-selling the SiaNotes,” the SEC order states.

In 2015, Nebulous converted SiaNotes to Siafunds, tokens meant for investors, at a 1:1 ratio. This time around, the company was upfront about their status. “Siafunds are only good for providing income, and are an investment asset,” it stated, according to the SEC.

Nebulous conducted another offering of Siafunds in 2018. The offering raised $1.5 million and was a Token Securities Offering (TSO), compliant with existing securities regulation. Release of the DAO Report of Investigation, a 2017 report that examined the status of and provided guidance for evaluation of digital token offerings, played a key role in that decision.

The Sia network today employs a two-token model in which Siacoins are used to conduct transactions in the storage network while Siafunds are meant for investors.

“We are pleased at how the company and the network fared under such intense regulatory scrutiny and that after a thorough investigation, the SEC asserted no claims regarding Siacoins or the current operations on the Sia network,” Zach Herbert, COO of Nebulous, stated.

News of the settlement comes a day after the agency announced a settlement of $24 million (or approximately 0.6% of the total amount raised) with Block.one, which conducted the world’s biggest coin offering of slightly more than $4 billion in 2017.