SEC Charges Blockchain of Things ICO with Unregistered Sale

Published on 17 and 2018 by Cryptovest Staff

All ICOs issued after December 2017 may fall under the SEC scrutiny, as a warning report was released at that point.

The US Securities and Exchange Commission charged the Blockchain of Things (BCOT) with selling an unregistered token toward the end of 2017. The ICO has agreed to settle, while returning the funds to investors. The BCOT token may also relaunch as a registered asset.

The BCOT project also had to pay a fine of $250,000. Data about the ICO include one session completed toward the end of 2017, with another session open in May 2018. The last session was opened in December 2019, as the project raised funds periodically.

“BCOT did not provide ICO investors with the information they were entitled to receive in connection with a securities offering,” said Carolyn M. Welshhans, Associate Director in the SEC’s Division of Enforcement.

“We will continue to consider appropriate remedies, such as those in today’s order, to provide investors with compensation and required information and to provide companies who conducted unregistered offerings with an opportunity to move forward in compliance with the federal securities laws.”

The ICO, despite being registered in Vietnam, apparently targeted US buyers, raising as much as $13 million by SEC estimates. The ICO, however, also saw warnings that its team was unverified.

The timing of the ICO happened at a time when the US SEC had already released a report on the parameters of token sales. The publication, dated December 2017, also creates a cutoff line where token sale projects may face serious sanctions. The report outlines the test to determine if a token could be deemed an unregistered security.

The SEC definitions were based on the sale of DAO tokens, and were used for an entirely unrelated ICO. Currently, the Commission is busy with multiple projects from the ICO boom in 2017 and 2018, reaching different sanction outcomes. Some projects, like EOS, only received a fine and continued their operation. Others received a cease-and-desist order and a decision to return the funding. The US was among leading regions for token sales, but local securities law turned out the least favorable, leaving startups in serious legal debacles.