securities and exchange commission
On December 18, 2019, the securities and exchange commission announced the settlement of charges against blockchain technology company Blockchain of Things Inc. (BCOT) for expenses of alleged conduction of unregistered initial coin offering (ICO) of cryptocurrency tokens.
As per the order of SEC, BCOT, which is a New York-based startup conduction, the ICO of digital tokens in early December 2017, after the DAO Report of Investigation, has made it clear that ICOs can be securities offerings.
BCOT, mainly operating in the area of creating a blockchain-based technology and platform, has raised over $13 million for the implementation of its business strategies. BCOT had intended to involve third-party developers to develop in-built applications for logging and message transmission, generation of digital assets, and its transfer. The SEC’s order upon investigation found that BCOT has sold its cryptocurrency token to foreign investors. They hired resellers to engage as the exclusive sellers of its souvenirs in certain countries without any restraints on reselling purposes to the federal securities law. But the SEC’s order further came to know that BCOTa’s ICP pursuant is unregistered to the federal securities law. It is unqualified to get exempted from the registration requirements.
Carolyn M.Welshhans, Associate Director in the SEC’s Division of Enforcement, said that ICO investors of BCOT were unknown of the fact that they were entitled to receive in connection with the ICO securities offering. Further, the commission will consider proper remedial actions, such as to provide ICO investors with compensation and information and ensure the companies about who conducted unregistered ICO offerings. They have determined to go ahead with the compliance with the federal securities law.
The SEC’s order would cease BCOT and desist it from committing any vio; actions of the prescribed provisions of the federal securities law, and a penalty of $250,000 is imposed. BCOT undertakes to return funds to its ICO investors and request a return of their funds according to SEC’s order.
The company is moving forward to register its digital tokens as securities under the Securities Exchange Act of 1934, and periodic reports will be submitted to the commission. The investigation in BCOT was carried out by Kathleen McDermott under the supervision of Laura Josephs, Assistant Director, and Ms. Welshhans.