Brendan Blumer, the chief executive of Block.one
Brendan Blumer, the chief executive of Block.one, was named by Forbes as one of "the richest people in cryptocurrency" in February last year. Gandalf Hammerbacher/Picture Alliance

The U.S. Securities and Exchange Commission (SEC) has decided that Block.one, the firm behind EOS, must pay $24 million in penalties for conducting an unregistered securities sale, the regulatory agency said in a press release on 30 September.

According to the announcement, the SEC has concluded that the company has raised the “equivalent of several billion dollars” during its one year long unregistered Initial Coin Offering (ICO).

The regulatory agency also revealed that Block.one has agreed to settle the charges, without admitting or denying the findings.

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Blockchain Daily
Blockchain Daily
Blockchain Daily
Blockchain Daily

The SEC further said that even though Block.one’s ICO began before it released its DAO Report, it continued for “nearly a year” after it was out, and that the company did not register the sale, nor got an exemption from the securities registration requirements.

The firm behind the EOS network and its corresponding token raised around $4.1 billion, which makes the fine only 0.58% of the ICO proceeds. Stephanie Avakian, the SEC’s Division of Enforcement co-director, said:

“A number of U.S. investors participated in Block.one’s ICO. Companies that offer or sell securities to U.S. 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.”

One of the reasons behind the fine is that, during its ICO, Block.one did not provide its investors with the information usually included in securities sales. Steven Peikin, Co-Director of the SEC’s Division of Enforcement, said in the press release:

“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.”

Today Block.one published its own press release, in which they said that their current token will not be required to be registered as a security, as the settlement only applied to the original ERC-20 token, which has already been swapped with the proper EOS tokens. The press release further reads:

“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.”

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