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EOS settles with SEC, pays $24 million penalty for unregistered ICO

Posted: 1 October 2019 12:01 pm
News

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$24 million is a small price to pay for legal peace of mind.

EOS parent company Block.one has reached a settlement with the SEC, paying a $24 million penalty for hosting an unregistered token sale.

The token sale in question is history's largest ICO, which raked in an estimated $4.1 billion over the course of a year.

"A number of US investors participated in Block.one’s ICO," said Stephanie Avakian, co-director of the SEC’s Division of Enforcement. "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."

"Block.one did not provide ICO investors the information they were entitled to as participants in a securities offering," said Steven Peikin, co-director of the SEC’s Division of Enforcement. "The SEC remains committed to bringing enforcement cases when investors are deprived of material information they need to make informed investment decisions."

A long time coming

More than a year ago, SEC director of corporate finance William Hinman said unregistered ICOs could be exempt from retroactive penalties if the projects they support are sufficiently decentralised, if the proceeds from the token sale do not pool at a central entity, and if the token has a valid application beyond speculation.

Under these criteria, Ethereum, and Vitalik Buterin and the Ethereum Foundation more specifically, were exempt from penalty despite arguably perpetrating an unregistered security offering.

Also under these criteria, it may have been inevitable that EOS would face penalties someday.

It may be a satisfying result for Block.one though. $24 million is a small amount next to the $4.1 billion it supposedly raised.

And given all the other suggestions of impropriety during the ICO, it's safe to say Block.one is perfectly happy to leave that token sale in the past to the fullest extent possible.



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Disclosure: The author holds BNB, BTC at the time of writing.

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