HomeAltcoin NewsThe SEC Targets Blockchain Company Over Unregistered Token Sale

The SEC Targets Blockchain Company Over Unregistered Token Sale


The Securities and Exchange Commission (SEC) is continuing to exhibit its newfound hard-as-nails attitude towards crypto and blockchain ventures, and has recently enforced a $250,000 penalty on a startup called Blockchain of Things Inc. (BCOT)

The SEC Is Not to Be Taken Lightly

The SEC alleges that the company hosted an unregistered initial coin offering (ICO) back in December 2017. That ICO resulted in roughly $13 million in capital gained for BCOT. Granted the company is forced to comply with the agency, it will likely be made to give this money back to its investors.

In addition, the company will be required to register all future token sales with the SEC as part of the 1934 Securities Exchange Act. It will also need to file periodic reports with agents so they can remain aware of how the company is handling its securities holdings.

Associate director of the agency’s division of enforcement Carolyn M. Welshhans claims that the company did not provide all the necessary data to its investors that they were entitled to receive before making decisions regarding BCOT’s securities offering. In a statement, she explains:

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 SEC has been coming down hard on unregistered securities offerings over the past two years. Among the biggest examples is one involving Paragon Coin, which – along with its partner company AirFox – had to pay more than $250,000 in penalty fees for allegedly hosting an unregistered cryptocurrency sale.

Another example involves Token Lot LLC, which took place in September of 2018. The company was working as a broker but had allegedly failed to register as one and did not possess the appropriate licensure. As a result, the SEC came after the company, forcing executives to pay more than $470,000 in disgorgement fees. In addition, the company had to fork out more than $7,000 in interest payments, while Token Lot’s founders had to cough up approximately $47,000 each.

ICOs Don’t Have the Same Presence

ICOs, while still relatively common, have lost weight over time given how scam-laden many have turned out to be. Executives are not necessarily looking to raise funds for a company or legitimate startup but are instead seeking funds that they can exploit and use for personal reasons. Many of these executives quickly close their business doors following the ends of their token sales and run off with the money, leaving investors with bruised egos and empty pockets.

Other companies, however, are legitimately trying to raise capital but simply cannot garner the funds necessary to keep themselves afloat, meaning the company shuts down early or even before it can get off the ground.


Nick Marinoff
Nick Marinoffhttps://www.livebitcoinnews.com/
Nick Marinoff is currently a lead news writer and editor for Money & Tech, a San Francisco-based broadcasting station that reports on all things digital currency-related. He has also written for a number of other online and print publications including Black Impact Magazine, EKT Interactive, Seal Beach USA and Benzinga.com, to name a few. He has recently published his first e-book "Take a 'Loan' Off Your Shoulders: 14 Simple Tricks for Graduating Debt Free" now available on Amazon. He is excited about the potential digital currency offers, particularly its ability to finance unbanked populations and bring nations together financially.

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