US Securities and Exchange Commission Settles with EOS

In a $24 million settlement, EOS was off the hook for its ICO, which was deemed the sale of unregistered securities.

EOS finally got the bill for its $4 billion ICO, after a monetary settlement with the US Securities and Exchange Commission. The Block.One company received a monetary fine of $24 million for failing to register the preliminary EOS token as a security while raising funds.

The EOS token sale took an entire year, with daily auctions to distribute tokens. Then, the token was swapped for a new asset that works as a utility coin. In the past, the US SEC has deemed crypto tokens as securities, as long as they were used to raise funds and offered future returns. But older ICOs, such as Ethereum (ETH) went without sanctions.

Newer ICOs, however, received increasing scrutiny from the US SEC. The high-publicity EOS token sale was among the prominent lawsuits for token sellers.

“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.”

ICO sellers generally do not comply with requirements for disclosures or duties to the buyers, which are common when a registered security it sold. While EOS now works as a utility coin, the chief reason for purchases was the expectation for future gains.

The EOS market price behaved in an appealing manner during the token sale, rising rapidly from just $0.50 up to nearly $14. Despite talks of market manipulation, traders expected to see EOS at much higher prices.

EOS currently trades at $3.03, with relative stability, though not achieving more significant rallies.

Block.One, however, seemed unaffected by the proceedings. Allegedly, if the ICO was fair, EOS may have raised as much as $4 billion in ETH. The company also receives significant returns from staking its EOS tokens, which are about 10% of the total supply. Tne next move for Block.One is to develop the Voice service, offering chats plus blockchain-based record-keeping.

Reading now