Block.one settles with the SEC for $24M in penalties for conducting an unregistered securities sale; Block.one had raised ~$4.1B via ICO over a one-year period
The SEC's $24M settlement closes the regulatory loop on that raise, charging it as an unregistered securities sale. Notably, the penalty equals well under one percent of the funds collected, and unlike the later $100M BlockFi settlement — which forced the lender to register its savings product as a security — this resolution carries no visible registration obligation.
First-order effects
Block.one pays $24M in penalties while keeping the bulk of its ~$4.1B war chest intact, with EOS token holders left holding an asset the SEC has now formally characterized as an unregistered security.
Second-order effects
The modest penalty-to-raise ratio sets a de facto price list for other ICO issuers weighing whether to settle retroactively, while the SEC's subsequent BlockFi action shows enforcement hardening from penalty-only deals toward settlements that compel registration.
Third-order effects
If the pattern holds — cheap retroactive penalties followed by registration-forcing consent orders — token issuers face a structural choice between settling legacy sales and moving offerings into registered or exempted frameworks, exactly as the SEC's stated plan to exempt certain token offerings and establish joint crypto rules with the CFTC anticipates.
The trend: Crypto fundraising is migrating from the unregistered ICO boom of 2017-18 toward SEC-supervised registration and exemption regimes, with enforcement settlements serving as the bridge.
2/ nature of settlement is Block One neither admits nor denies the allegations, meaning can't be used against them in, e.g. proceedings with other enforcement bodies, regulators, or private civil suits
@Techmeme @nikhileshde In addition to what's been reported here, Block[.]one has stated that “the SEC has simultaneously granted [it] an important waiver so that [it] will not be subject to certain ongoing restrictions that would usually apply with settlements of this type.”
If the relative amounts raised and fined remained equal, this would have been like a $500k fine for Kik. Maybe the SEC only wants to execute one company at a time, and signal a very easy path if they submit and kiss the ring? https://twitter.com/...
By far the most important part of the @block_one_ settlement is that it suggests that the pre-product, pre-launch ERC-20 version of the EOS token was a security, but the post-product, post-launch EOS token is not.
@SEC_Enforcement @block_one_ Champagne corks are flying at @block_one_ HQ tonight. “Cheers! We got away with it!!!!” https://www.theblockcrypto.com/ ...
The collective community response to EOS settlement is either horror at the injustice or outright mocking of SEC. I, again, call for reasonable regulations that give US companies a fighting competitive chance, and avoidance of these 🤡 moments in future https://www.techmeme.com/..…
Amazing outcome for @block_one_ and the entire #EOS community. No admission of wrongdoing, no token required to be registered as a security, and no restrictions on future offerings. Kudos to @block_one_ 's professionalism https://twitter.com/...
BREAKING: #EOS was just fined $24 million by the SEC for an unregistered initial coin offering. Barely a dent in the $4 billion they raised. $EOS #Crypto Thoughts?? SOURCE: https://www.sec.gov/...
Is excited the right word?? “We are excited to resolve these discussions with the SEC and are committed to ongoing collaboration with regulators and policy makers as the world continues to develop more clarity around compliance frameworks...” https://block.one/...
Wow. @block_one_ settled with the SEC for what's pretty much the entirety of money raised via ICO prior to 2017. What makes that so remarkable is that it is just a small dip in the treasury balance sheet from the eye-watering @eos ICO. https://www.sec.gov/...
Step 1: create year long ICO fund raise Step 2: advertise ICO with a billboard in Times Square Step 3: raise ~$4 billion, from retail investors globally Step 4: deny that the ICO was an unregistered securities offering Step 5: get listed Step 6: get sued by SEC, settle for $24m h…
.@block_one_ has settled with the SEC for $24 million for running the EOS token sale. The company reportedly raised $4 billion from the year-long ICO. pic.twitter.com/KUxVj8r0fw
Be right back, gotta finalize my ICO docs so I can conduct an unregistered security offering. Going rate for blatantly violating federal securities laws these days is 0.59% of funds raised. Thanks for the guidance @SEC_Enforcement! Congrats @block_one_! https://www.sec.gov/... ht…
Really sad to see so many in the crypto world upset that @block_one_ wasn't fined *even more* by the SEC. They had $24m taken from them. Some of y'all are more like Elizabeth Warren than Satoshi Nakamoto.