Blockchain of Things to pay $250k penalty to settle charges for unregistered ICO

Maria Nikolova

The firm undertakes to return funds to those investors who purchased tokens in the ICO and request a return of the funds.

The United States Securities and Exchange Commission (SEC) today announces settlement of charges against blockchain technology company Blockchain of Things Inc. (BCOT) for conducting an unregistered initial coin offering (ICO) of digital tokens.

According to the SEC’s order, New York-based startup BCOT conducted the ICO beginning in December 2017. The firm raised nearly $13 million to develop and implement its business plans, including developing its blockchain-based technology and platform. BCOT’s platform was intended to allow third-party developers to build applications for message transmission and logging, digital asset generation, and digital asset transfer.

The SEC has found that the firm sold its digital tokens to US investors and engaged four “resellers” to serve as the exclusive sellers of BCOT’s digital tokens in certain foreign countries without restrictions on resale of those tokens to US investors. The SEC has also found that BCOT did not register its ICO pursuant to the federal securities laws and that it did not qualify for an exemption from the registration requirements.

Under the settlement, BCOT will cease and desist from committing or causing any violations of the registration provisions of the federal securities laws, and will pay a $250,000 penalty. The firm also undertakes to return funds to those investors who purchased tokens in the ICO and request a return of the funds. Further, BCOT will register its tokens as securities pursuant to the Securities Exchange Act of 1934 and will file required periodic reports with the SEC.

Carolyn M. Welshhans, Associate Director in the SEC’s Division of Enforcement, explains:

“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.”

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