SEC Settles With Blockchain of Things for Unregistered ICO: What You Need to Know

Breaking Down the Settlement

The U.S. Securities and Exchange Commission (SEC) has taken a definitive stand, settling charges against Brooklyn’s Blockchain of Things Inc. (BCOT) related to their unregistered initial coin offering (ICO). For those who might be wondering: yes, even the digital currency world has rules to play by, and BCOT, unfortunately, found this out the hard way.

Cease and Desist: The Requirements

As part of the settlement, which was announced on December 18, BCOT is now required to cease any future violations of the capital markets’ registration provisions. It may sound dramatic, but think of it like cosmic traffic cops pulling over a rogue spaceship—BCOT has to comply or face the music again. They’ve also agreed to pay a sweet penalty of $250,000, albeit without admitting or denying any wrongdoing. You could almost say they’re taking the politician’s route: “I didn’t do it, but here’s $250K just to placate you.”

Fundraising and Refunds: The Numbers Game

Let’s talk dollars and cents: BCOT was able to rake in a whopping $13 million with their ICO. Alas, a large chunk of that money will now need to be refunded to investors who’ve raised their hands in dismay. And the big question still looms: how many investors will actually go through the trouble of asking for their money back? As of now, BCOT tokens aren’t even trading on major exchanges—which could make retrieving that sweet moolah a bit of a scavenger hunt.

Regulatory Compliance: Moving Forward

The SEC isn’t simply waving goodbye. They’ve mandated that BCOT will need to register its tokens as securities in accordance with the Securities Exchange Act of 1934. You could say the SEC is pulling BCOT back into the regulatory fold, ensuring they are no longer the rogue elements of digital assets. Plus, periodic reporting is now on the table—making sure they keep their financial ducks in a row.

Lessons from the ICO Landscape

While BCOT’s dance with the SEC is certainly an eye-opener, it’s not an isolated incident. Just recently, Eran Eyal, the founder of Shopin, pleaded guilty for orchestrating a fraudulent ICO that raised over $42 million. The courtroom drama unfolded with Eyal facing hefty restitution and judgments, not to mention a significant return on his crypto investment to the authorities. What can we learn from all this? First, if you plan on holding an ICO, make sure to secure your compliance plan—it’s easier than a court date, I promise.