“Block.one did not register its ICO as a securities offering pursuant to the federal securities laws, nor did it qualify for or seek an exemption from the registration requirements,” said the US Securities and Exchange Commission (SEC) via a press release.
The SEC highlighted the publishing of its investigation into autonomous blockchain firm “The DAO,” which clearly detailed its position on how tokens like EOS fit in with US securities law, especially with concern to ICOs.
Still, the SEC noted, Block.one continued to offer the sale of 900 million tokens for nearly a year after that report was published.
“Block.one did not provide ICO investors the information they were entitled to as participants in a securities offering,” said Steven Peikin, the co-director of the SEC’s enforcement division. “The SEC remains committed to bringing enforcement cases when investors are deprived of material information they need to make informed investment decisions.”
Block.one’s illegal ICO ran from June 2017 to June 2018. In one year of selling unregistered securities, the firm raised the equivalent of $4.1 billion dollars to fund development of the EOS network — all without an actual product.
The firm did not accept or refute the charges, and will pay the $24 million in the form of civil penalties.
To compare, Ethereum, the world’s second largest blockchain by market cap, initially raised just over $8 million for its development.
While the Ethereum network has recently been found to be heavily reliant on centralized hosting services like Amazon Web Services, the SEC has already deemed its ecosystem too decentralized for its native cryptocurrency to be classified as a security.
Want more Hard Fork?Join usin Amsterdam on October 15-17 to discuss blockchain and cryptocurrency with leading experts.