Press Release SEC Orders Blockchain Company to Pay $24 Million Penalty for Unregistered ICO FOR IMMEDIATE RELEASE 2019-202 Washington D.C., Sept. 30, 2019 — The Securities and Exchange Commission today announced settled charges against blockchain technology company Block.one for conducting an unregistered initial coin offering of digital tokens (ICO) that raised the equivalent of several billion dollars over approximately one year. The company agreed to settle the charges by paying a $24 million civil penalty. According to the SEC’s order, Block.one, which has operations in Virginia and Hong Kong, conducted an ICO between June 2017 and June 2018. The order finds that Block.one stated it would use the capital raised in the ICO for general expenses, and also to develop software and promote blockchains based on that software. 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, eventually raising several billion dollars worth of digital assets globally, including a portion from US investors. 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. “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.” The SEC’s order finds that Block.one violated the registration provisions of the federal securities laws and requires it to pay a $24 million civil monetary penalty. Block.one consented to the order without admitting or denying its findings. The investigation was conducted by Luke M. Fitzgerald and Tuongvy Le, and was supervised by John O. Enright, of the SEC’s Cyber Unit and New York Regional Office. https://www.sec.gov/news/press-release/2019-202
I always wondered how come ICO issuers get away with so little scrutiny that an IPO issuer can't? at the end of the day in both cases you are forking out / investing real money for a "business concept" are you not so for example in a jurisdiction like Australia for an IPO there are lot of hurdles but for an ICO a 4 page "white paper" that is all that is needed Then somebody said oh but those ICOs are "Utility" tokens not "Security tokens" and hence little scrutiny is needed! but what is the diif in the above example if the ICO issuer claimed that " it would use the capital raised in the ICO for general expenses, and also to develop software .." But that is exactly a new IPO company would be doing and for that raise they will have to go through the scrutiny whatever at the end of the day it is real money so it should have same regulatory oversight as and IPO! by the way does this mean by paying 23 M fine they get to keep the 900 Mil raised without a proper IPO style disclosure? If true I say they "Ubered" it = Uber 1 01 = Stuff the regulators , get in by hook or crook and then pressure the regulator to accept what is already in practice