UNITED STATES OF AMERICA

Before the

SECURITIES AND EXCHANGE COMMISSION

SECURITIES EXCHANGE ACT OF 1934

Release No. 90938 / January 15, 2021

ADMINISTRATIVE PROCEEDING

File No. 3-20206

In the Matter of

Wireline, Inc.

Respondent.

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ORDER DIRECTING PAYMENT OF 

CERTAIN FUNDS RECEIVED BY THE 

COMMISSION AND DIRECTING 

TRANSFER OF REMAINING FUNDS 

TO THE U.S. TREASURY

On January 15, 2021, the Commission simultaneously instituted and settled a cease-anddesist proceeding (the “Order”)1

against Wireline, Inc. (the "Respondent"). In the Order, the 

Commission found that between January and September 2018, Wireline, an early-stage project 

focused on the development of a decentralized, blockchain based platform for “microservices” 

applications, conducted a multi-phase securities offering through which it raised over $16.3 

million (the “Offering”). Wireline offered and sold securities in the form of investment contracts 

when it offered and sold digital assets through simple agreements for future tokens (“SAFTs”). 

The SAFTs provided that upon the public release of Wireline’s marketplace, Wireline would 

distribute those digital tokens to investors, who were counterparties to the SAFTs. Wireline 

represented to investors that the funds would be used to develop the Wireline microservices 

platform and that the tokens would be used as the means of exchange between software 

developers and end-users on Wireline’s marketplace. The Offering was not registered pursuant 

to the federal securities laws, and their offer and sale did not qualify for an exemption from the 

registration requirements. Wireline never distributed the digital tokens to investors.

Wireline also violated the antifraud provisions of the federal securities laws with respect 

to the offering by making materially false and misleading statements about the viability of its 

platform and the timetable for the issuance of its tokens. In connection with its securities 

offering, Wireline falsely asserted that more than 100 developers were publishing applications to 

its marketplace, that its platform had been functioning in “private beta” for more than nine 

months, and that the token distribution was imminent. These statements materially 

misrepresented Wireline’s functionality and progress, and more than two years since it made 

these statements, Wireline’s platform has not launched. 

 

1

 See Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making 

Findings and Imposing Penalties and a Cease-and-Desist Order, Securities Act Rel. No. 10920 (Jan. 15, 2021).
2

As a result, the Commission ordered the Respondent to pay a $650,000 civil money 

penalty to the Commission. The Commission also created a Fair Fund, pursuant to Section 

308(a) of the Sarbanes-Oxley Act of 2002, so the monies collected could be distributed to those 

harmed by the Respondent's conduct described in the Order (the “Fair Fund”). 

The payment of a civil penalty constitutes a qualified settlement fund (“QSF”) under 

section of 468B(g) of the Internal Revenue Code (IRC), 26 U.S.C. Section 468B(g), and related 

regulations, 26 C.F.R Sections 1.468B-1 through 1.468B-5. 

After receipt of the civil money penalty referenced above, the Commission staff will seek the 

appointment of a tax administrator to establish a reserve for taxes and related administrative expenses

(the “Reserve”). Upon establishing and withholding the Reserve, the Commission staff will distribute 

the remaining funds in the Fair Fund to the 28 investors harmed by the Respondent’s conduct 

described in the Order. After the distribution payments and all taxes and administrative expenses are 

paid, the Commission staff will transfer the remaining funds, if any, that are infeasible to return to 

investors, to the general fund of the United States Treasury subject to Section 21F(g)(3) of the 

Securities Exchange Act of 1934 (“Exchange Act”).

Accordingly, it is ORDERED that:

A. After receipt of funds, the Commission staff shall seek the appointment of a tax 

administrator to, among other things, comply with the tax-related obligations of 

the QSF and establish the Reserve.

B. After withholding the Reserve, the Commission staff shall disburse the remaining 

funds in the Fair Fund to the 28 harmed investors.

C. Any amounts remaining in the Fair Fund after completion of A and B above, that 

are infeasible to return to investors, and any amounts returned to the Fair Fund in 

the future that are infeasible to return to investors, shall be transferred to the 

general fund of the United States Treasury subject to Section 21F(g)(3) of the 

Exchange Act. 

By the Commission.

Vanessa A. Countryman

Secretary