Blockchain of Things Inc (BCOT), a New York founded startup, has been penalized $250,000 by the SEC for launching an ICO without following the proper registration process. The firm is also expected to cease any crypto operations that result to a violation of the securities law.
According to an announcement by the SEC on Dec 18, the crypto oriented firm agreed to settle with the regulator and not comment or defend itself as per the findings. The SEC had earlier on revealed through an order that BCOT raised $13 million through an ICO for its security token.
Proceeds from this BCOT funding round were meant to facilitate its blockchain development for third party solutions. Basically, the idea was to enable developers build DApps for crypto transfers, digital currency generation and message relaying.
The U.S regulator has since emphasized that BCOT was out of line given they did not provide necessary information to prospective investors. It therefore follows that the firm ought to have registered its ICO under the federal securities law to get proper guidance on raising funds via a token sale. Associate Director of the SEC’s Division of Enforcement Carolyn M. Welshhans explained:
“BCOT did not provide ICO investors with the information they were entitled to receive in connection with a securities offering. 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.”
Apart from the $250,000 penalty, BCOT settled to reimburse the $13 million investment to investors who will request for their funds. Only time can tell whether the financial obligation spiked by this move will be overwhelming for BCOT.
Shopin’s $42 Million Illegal ICO
Just recently, Shopin’s founder found himself in a similar position as BCOT with the SEC. Eran Eyal was charged with facilitating a fraudulent ICO that managed to secure $42 million from unsuspecting investors. The cryptopreneur pleaded guilty in a court of law and has since been ordered to return $450,000 in digital currency to the Attorney General office. In addition, the Shopin founder is $475,000 in judgement to the ICO contributors and an extra $125,000 being part of restitution.