On September 30th 2019, the U.S. Securities and Exchange Commission (SEC) announced a settlement with Block.one. The SEC’s order claims Block.one raised billions of dollars in an unregistered securities offering, and will now pay a $24 million civil penalty as a result.
Block.one’s Settlement with the SEC Explained
Block.one has agreed to pay $24 million after conducting an unregistered Initial Coin Offering (ICO).
According to a press release from the SEC, Block.one conducted an ICO from June 2017 to June 2018, meaning the offering began just before the SEC released its DAO Report.
The ICO was successful, as 900 million tokens were sold for a total of $4.1 billion.
Notably, this means that the agreed upon settlement amounts to 0.0058% of the initial offering.
As per the SEC order, Block.one stated it would use the funds raised from the ICO for general expenses and “to develop software and promote blockchains based on that software”.
Billions were raised from investors around the globe, including US-based investors.
The SEC says Block.one did not register its ICO as a securities offering, nor did it seek an exemption from such registration requirements.
According to Stephanie Avakian, co-director of the SEC’s Division of Enforcement,
“A number of US investors participated in Block.one’s ICO. Companies that offer or sell securities to US investors must comply with the securities laws, irrespective of the industry they operate in or the labels they place on the investment products they offer.”
Steven Peikin, another co-director of the SEC’s Division of Enforcement added,
“Block.one did not provide ICO investors the information they were entitled to as participants in a securities offering. The SEC remains committed to bringing enforcement cases when investors are deprived of material information they need to make informed investment decisions.”
As per the terms of the settlement, Block.one neither admitted nor denied the findings of the SEC’s order.
Besides Block.one, the SEC has shown consistent enforcement in the digital asset realm.
64 successful STOs have been launched, which raised almost $1 billion collectively.
What do you think of Block.one settling with the SEC and agreeing to pay $24 million in civil penalties? Let us know what you think in the comments section below.
Image courtesy of the SEC.