The SEC has charged Block.one, the developer of EOS cryptocurrency for sale of unregistered securities. According to SEC’s press release, the company has been charged for the sale of over 900 million EOS tokens over a year.
Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement told the press,
“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.”
How was EOS unaffected?
Block.one also published a press release on their website regarding the issue. The firm noted that SEC charged them for the sale of ERC-20 tokens which must have been registered as securities. However, the EOC-20 tokens were burnt, and EOS tokens shifted to EOSIO blockchain platform.
The operations of the native platform, hence, remains unaffected. Block.one also noted that the SEC has also granted them a waiver. It protects them from “certain ongoing restrictions that would usually apply with settlements of this type.”
A Small Fine
The SEC levied a fine of $24 million which Block.one accepted without admitting or denying the agency’s findings. The amount of the penalty was rather small compared to the amount raised by the firm. According to sources, they raised about $4 billion during the sale from June 2017 – June 2018.
Steven Peikin, Co-Director of the SEC’s Division of Enforcement noted that,
“Block.one did not provide ICO investors the information they were entitled to as participants in a securities offering,”
The price reaction to the news has been positive on EOS. The investors in the blockchain platform have been apprehensive of the SEC for a long time. The firm has been let off with a small fine and no regulations on the current status of the cryptocurrency has been passed. The community sees this as a win-win.
The price of EOS at 3: 15 hours UTC on 1st October 2019 is $3.09. It is trading 10.86% higher on a daily scale. The crypto market is on the rise and unaffected by the ruling.
Various other firms can expect similar fines for the sale of their ICOs. It might include popular projects like Tezos, Maker, Binance Coin, Ripple, Tron, and so on. However, the SEC is examing each firm individually. Hence, the amount might differ for specific companies and projects.
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Nivesh from Engineering Background is a full-time Crypto Analyst at Coingape. He is an atheist who believes in love and cultural diversity. He believes that Cryptocurrency is a necessity to deter corruption. He holds small amounts of cryptocurrencies. Faith and fear are two sides of the same coin. Follow him on Twitter at @nivishoes or mail him at nivesh(at)coingape.com