Block.one, the company behind the EOS blockchain project has settled charges with the United States Securities and Exchange Commission (SEC) for an initial coin offering they conducted in 2017.
According to a Monday press release by the regulatory body, Block.one which raised the equivalent of several billions of dollars in a 2017 ICO, failed to register their offering with the SEC despite selling their tokens to U.S investors.
The SEC order reportedly found that Block.one promised investors that they would use the capital raised in the ICO for general expenses, and also to develop software and promote blockchains based on that software being EOS.
The regulator also argued that Block.one carried out their token offering despite the DAO report published by the SEC to state that nearly all initial coin offerings must be duly registered with the agency.
In this regard, the SEC wrote,
“Block.one’s offer and sale of 900 million tokens began shortly before the SEC released the DAO Report of Investigation and continued for nearly a year after the report’s publication.”
Co-Director of the SEC’s Division of Enforcement Steven Peikin alleged in the report that Block.one did not provide investors with the necessary information that they were entitled to as those partaking in a securities offering. He further reiterated the SEC’s commitment to bring an enforcement action in cases where investors are deprived of material information that they need to make sound investment decisions.
Meanwhile, Block.one agreed to pay a $24 million civil penalty without accepting or denying the charges, apparently because the imposed sum represents less than 1% of the roughly $4 billion which the company raised in their ICO.
On the records, the latest enforcement action against Block.one is the third of such cases covered by the SEC since the start of September. The two other occasions involved an adult site marketplace, whose founder settled charges for $63,000 and ICOBox, which could pay as much as $14.6 million for facilitating ICOs without registering as a broker with the SEC.