The Securities and Exchange Commission (SEC) has settled charges with Block.one, the firm behind EOS, after imposing a fine of $24 million for selling unregistered securities.
Per SEC’s announcement on Monday, the company raised “” in an initial coin offering (ICO) between June 2017 and June 2018. The company sold 900 million tokens and attracted headlines after without any live product, a very unusual thing for the mainstream tech industry.
SEC detailed that the token sale initiated after the agency released DAO Report of Investigation and the company did not register the ICO as securities offering while a major portion of the investors was from the United States.
“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,” Stephanie Avakian, co-director of the SEC’s division of enforcement, said.
The civil penalty was also imposed as the blockchain company violated the registration provisions of the federal securities laws.
“Block.one did not provide ICO investors the information they were entitled to as participants in a securities offering,” Steven Peikin, co-director of the SEC’s division of enforcement, added.
No more unregistered tokens in circulation
In its official response, Block.one detailed that the penalty was specifically for the EOS tokens released on Ethereum blockchain. The EOS holders swapped these ERC-20 tokens for EOS tokens when the native blockchain of the company went live.
“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’s announcement stated.
“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.”
Earlier this year, Bloomberg revealed that the blockchain company is planning to from early investors, returning them 6,567 percent on the investments in merely three years.