The US SEC has settled charges with Block.one, the firm behind the development of EOS. The agency fined the company $24 million for selling unregistered securities to reach this settlement. SEC unveiled this news on September 30.
Per the SEC, this is an unusual occurrence in the mainstream tech sector. Block.one’s token sale began after the agency released the DAO Report of Investigation. Moreover, the firm did not register its ICO as a securities offering. As a result, the firm went against the set rules as most of the investors in its ICO were US-based.
Stephanie Avakian, co-director of SEC’s division of enforcement said,
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 Peiking, co-director of 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,
Unregulated Tokens are No Longer in Circulation
In a press release, Block.one disclosed that the penalty was for EOS tokens that launched on the Ethereum blockchain. However, EOS holders later swapped the ERC-20 tokens for EOS tokens when the EOS blockchain went live. As such, this settlement would resolve all issues between the firm and the market watchdog.
Block.one noted that,
The SEC has simultaneously granted Block.one an important waiver so that Block.one will not be subject to certain ongoing restrictions that would usually apply with settlements of this type. Block.one believes the SEC’s granting of this waiver evidences Block.one’s continuing commitment to compliance and best practices in the United States and globally.
According to Block.one, the $24 million is a one-time fine and is equivalent to 0.0058 percent of the amount raised in its ICO. The firm agreed to pay this amount without admitting or denying to the agency’s findings.
This news comes after a report unveiled that Block.one sought to buy back 10 percent of its shares from early investors. In so doing, the firm would give the investors a 6,567 percent return in less than three years. Per the report, the firm was offering $1,500 per share compared to the seed round pricing of $22.5.
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