Revealed on Monday, EOS block maker Block.one agrees to pay $24M penalty to settle a case against the U.S Securities and Exchange Commission (SEC). The penalty was imposed by the SEC for conducting an unregistered Initial Coin Offering (ICO) between June 26, 2017 and June 1, 2018.
Block.one is a company behind the famous EOS Blockchain which had raised $4.1 billion in a securities sale between 2017 to 2018 which SEC claimed as unregistered. As per SEC, Block.one failed to register its ICO as a securities offering with SEC which signifies that the company violated the securities law. While the firm successfully raised billions in its ICO, it must pay millions in penalties.
In a press release on Monday, SEC states that the unregistered ICO offering also captured a number of US investors who participated in it. Steven Peikin, the co-director of the Division of Enforcement bet higher on the SEC’s effort of cracking down on such acts that tend to bring investors at riskier zones. In his words;
“Block.one did not provide ICO investors the information they were entitled to as participants in a securities offering,” said Steven Peikin, “The SEC remains committed to bringing enforcement cases when investors are deprived of material information they need to make informed investment decisions.”
As a response, Block.one released a new blog entitling “Block.one announces a settlement with US Securities and Exchange Commission”. The firm notes that the settlement is purely related to “ERC-20 token sold on the ETH blockchain” which is no longer in circulation. And in further note, the firm partially agreed to SEC’s finding, stating that “Block.one will pay a one-time fine of US$24 million, whilst neither admitting nor denying the SEC’s finding”. Furthermore, Block.one clarifies that this settlement puts an end to all ongoing legal matters between the firm and regulator.
“We are excited to resolve these discussions with the SEC and are committed to ongoing collaboration with regulators and policy makers as the world continue to develop more clarity around compliance frameworks for digital assets, Company said in a statement”
Although Block.one agrees to pay the penalty SEC levied, its worth noting that the penalty charges are merely 1 percent of the billions raised during the ICO. On the other side of the matter, it appears that violating laws by raising funds via unregistered securities is still a profitable business which is why Gabiel Shapio,the founder of crypto focused Zero law criticized SEC, stating;
Honestly I think this is a bad look for the SEC. This sends a message that violating securities laws can be quite profitable.”
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