SEC orders Blockchain of Things to pay $250,000 fine

A blockchain start-up has been fined $250,000 for selling unregistered securities to investors in America in the latest crackdown by the US Securities and Exchange Commission (SEC) on ICO sales.

Blockchain of Things (BCoT) settled the fine with the regulator after admitting to selling unlicensed tokens through an ICO sale.

BCoT, based in New York, provides second-layer APIs for companies who want to deploy blockchain decentralised applications (dApps) or use a blockchain network for their company infrastructure.

The start-up raised more than $12 million during the sale in December 2017 through the sale of BCOT tokens, which were used to access the company’s services.

BCoT has now stated that it will be looking to register the tokens under Section 12(g) of the Securities Exchange Act of 1934 and make the necessary filings to keep up with securities laws.

In addition, BCoT will pay a “civil monetary penalty” of $250,000 directly to the SEC. This comes after the SEC expressly warned BCoT that its tokens were classed as securities in the same manner as DAO tokens.

At the time, BCoT chose to ignore this warning and continued its token sale.

Refund investors

In an official blog post on BCoT’s Medium page yesterday, the team shared that in addition to the $250,000 fine to the SEC, it would also be reimbursing ICO participants who wished to get their cash back.

Any investor who purchased tokens prior to June 27 2018 will be able to submit a claim form and can tender their BCOT tokens for the amount they originally paid for them. BCoT will be required to provide monthly updates to the SEC on refunds issued.

Andre De Castro, CEO of BCoT, said that the resolution will allow the company to carry on with normal business, sharing:

“Blockchain of Things is thankful that the BCOT token is included in today’s action by the SEC and that we are thereby being given the opportunity to continue to deliver our innovative second-layer technology while continuing to participate in the ever-evolving blockchain application space.”

The SEC hasn’t typically been so lenient on token sales it deems to be fraudulent or unregistered, as evidenced by its recent aggressive pursuit of a case against British ICO fraudster Renwick Haddow to seek monetary compensation.

Therefore, it’s likely that BCoT has been working proactively alongside the US regulator to operate within the law.