EOS maker Block.One must pay $24 million in penalties for conducting an unregistered securities sale, the U.S. Securities and Exchange Commission (SEC) announced Monday evening.
The fine amounts to 0.58 percent of the initial raise.
Notably, the press release highlighted that Block.One’s token sale began shortly before the SEC released its DAO Report but “continued for nearly a year after the report’s publication.” The company did not secure an exemption from securities registration requirements and did not otherwise register the sale, the SEC said.
In its own press release, Block.One said the settlement only applies to the sale of the original ERC-20 token it sold. EOS holders swapped their ethereum-based tokens with the proper EOS tokens when the network first went live.
More significantly, Block.One's statement said that its ERC-20 token is no longer in circulation "and will not require the token to be registered as a security with the SEC."
The release added:
Block.One declined to comment further to CoinDesk.
In a statement, SEC Division of Enforcement co-director Steven Peikin said the company “did not provide” investors with any of the information typically included in securities sales. The SEC's order echoes this complaint.
Just last week, the commonwealth of Virginia gave Block.One a $600,000 grant to help build out its U.S. headquarters in Arlington, a suburb of Washington, D.C. The company has existing operations in Blacksburg, Va., as well as a major hub in Hong Kong.
According to the SEC press release, Block.One did not admit to or deny the regulator’s findings in deciding to settle.
CEO Brendan Blumer image via Block.One
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.