Block.one has agreed to pay a $26 million fine set by the SEC over the company’s unregistered initial coin offering (ICO). The firm was facing SEC charges on accusations of having conducted an illegal sale of tokens.
The settlement that Block.one reached with the SEC has raised more questions than provided answers over the conduct of the regulator when it comes to dealing with ICOs. Block.one raised $4 billion through the offering of its EOS cryptocurrency in 2017. The $26 million that Block.one paid as a fine is less than 1% of the total amount that was raised during the ICO. The company has made this settlement without having to admit or deny the charges that were being leveled by the SEC.
The regulatory body’s penalty against Block.one is also light when the amount that was raised during the ICO is considered. There is no further action that has been taken against Block.one. The company has not been forced to repay any of the investors that took part in the ICO and bought billions of dollars worth of EOS tokens. The only action that the company has faced is a civil penalty that is a drop in the bucket in comparison to the money raised during the ICO.
Over the last two years, the SEC has been in an ongoing battle against several crypto related businesses that have conducted ICOs. The regulator has seemingly been going after the crypto industry by forcing firms to register their tokens as securities. The decision by the SEC to institute no more than a $26 million fine in the case of Block.one has led to a lot of confusion and shock at the lack of severity in punishment.
Several members of the crypto community offered their reactions to the decision that was made by the SEC. Gabriel Shapiro, an attorney who founded crypto-focused ZeroLaw, said that the decision looks bad for the SEC. He added that the decision sends the message that violating securities laws can go unpunished and can be a profitable endeavor. The same sentiments were echoed by Nic Carter, a partner at Castle Island Ventures, who said that the verdict shows that the government will not protect investors or demand responsibility from token issuers.
To add to these limited punishments that Block.one has faced, the company has avoided SEC requirements to register EOS as a security. According to Block.one’s statement on the decision made by the SEC, the ruling deals with the ERC-20 placeholder token that the firm offered to investors during its ICO and not to the actual EOS token that is currently being used in the crypto industry.
After this matter has been concluded, there is no clear answer regarding whether EOS is a security or if it constitutes a non-security. Cryptocurrency exchanges are not required to delist the crypto asset, and investors do not have a clear position on whether they are allowed to engage with the digital asset. The SEC needs to clarify its position on securities and give the crypto industry definite guidelines on token offerings.
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