Cryptocurrency Startup Block.One Agrees to Pay $24 Million to SEC to Settle Allegations

Prominent crypto startup Block.One will have to pay $24 million to the US Securities and Exchange Commission (SEC) to settle the regulator’s allegations of violating the country’s investor protection rules.

What happened?

Block.One is the startup behind EOS, one of the largest cryptocurrencies in the world. EOS is known to have held a humongous initial public offering that brought in upwards of $4 billion from investors. However, the status of ICOs is dubious according to US law because of which the startup now has to pay $24 million to the SEC. This is one of the biggest fines that the regulator has imposed on a crypto company after it started cracking down heavily on the ICO industry two years ago.

ICOs have remained elusive of government control, but their glory days have long been buried. Pre-2017, coin offerings were a rage in the cryptocurrency industry and inviting everyone from potentially great crypto projects to swindlers. As a result of this, the industry saw hundreds of projects, some of which went bust because of a lack of ideas while others ended up defrauding hundreds of investors.

Almost all of the security offerings evaded the federal securities laws as they failed to provide their investors with adequate disclosure information which provided details about their operations and finances.

Block.one in trouble

The company’s officials are based out of Hong Kong, and the company launched its token offering at the peak of ICO fever between 2017 and 2018. The little-known startup gathered billions of dollars for its blockchain project without a prior track record of success. Now the company will pay a multi-million dollar fine alongside a disciplinary waiver because of which it will be allowed to invest in US companies.

According to the order on the SEC website, the firm could have disqualified from US fundraising exemptions, but the regulator waives those terms. The Cayman Island registered firm settled the case with the SEC without admitting or denying the regulator’s allegations. The company also released a statement on Monday suggesting that there is no regulatory clarity on cryptocurrencies.

It wrote,

“We are excited to resolve these discussions with the SEC and are committed to ongoing collaboration with regulators and policymakers as the world continues to develop more clarity around compliance frameworks for digital assets.”

However, the SEC says that the regulation is simple and clear. Any company that is offering securities or investments to US citizens will have to adhere to US laws.