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The United States securities regulator has announced hefty fines for two crypto companies. The penalties have been imposed for EOS’ unregistered token sale and a fraudulent public offering. The Securities and Exchange Commission (SEC) intends to use some of the collected money to indemnify investors who suffered damages.

Also read: SEC Commissioner Speaks Positively About Digital Assets Despite Recent Enforcement Flurry

On Monday, the SEC published an announcement revealing that Block.one, a blockchain technology company, has agreed to pay a $24 million fine to settle charges against it. Block.one was accused of conducting an unregistered initial coin offering (ICO) that raised several billion dollars’ worth of digital assets over a one-year period.

The company, which maintains operations in the U.S. state of Virginia and Hong Kong, sold 900 million digital tokens between June 2017 and June 2018 during the ICO boom. According to the SEC, it intended to use the raised capital to cover general expenses and to finance the development and promotion of new software and blockchain solutions.

As news.Bitcoin.com noted on Saturday, “The SEC’s fiscal year draws to an end on September 30, and some analysts believe the agency may finish with a flourish by taking action against fraudulent crypto projects.” This prediction has now come to pass.

Stephanie Avakian, co-director of the SEC’s Division of Enforcement, noted that a number of Americans participated in Block.one’s ICO. “Companies that offer or sell securities to U.S. investors must comply with the securities laws, irrespective of the industry they operate in or the labels they place on the investment products they offer,” Avakian stated, as quoted in a press release.

The other co-director of the division, Steven Peikin, detailed that the entity did not provide investors the information they were entitled to as participants in a securities offering. The official emphasized:

The SEC remains committed to bringing enforcement cases when investors are deprived of material information they need to make informed investment decisions.

The commission found that Block.one violated the registration provisions of the federal securities laws and asked the crypto company to pay the $24 million civil monetary penalty. The SEC pointed out that Block.one consented to the order without admitting or denying the findings that led to its issuance.

In a similar case, the SEC managed to obtain a fraud judgment against Longfin Corp. and its chief executive. A federal court in New York ordered them to pay almost $6.8 million in penalties and disgorgement after the crypto company, now out of business, and its management were charged with conducting a fraudulent public offering and falsifying revenue.

Longfin and CEO Venkata Meenavalli falsely claimed in filings with the regulator that the entity was based and operated in the U.S. in order to qualify for a Regulation A+ offering. They distributed over 400,000 free Longfin shares to insiders and affiliates and misrepresented the number of qualifying shareholders and shares sold in the offering in an attempt to meet the requirements for a Nasdaq listing.

The securities commission also alleges that Longfin reported fictitious revenue of more than $66 million, while Meenavalli and three accomplices distributed and sold more than $33 million of Longfin stock in unregistered transactions. In June, the court ordered over $26 million in disgorgement and penalties against Meenavalli’s affiliates. Then, in August, SEC fined both Longfin and Meenavalli a total of over $300,000. The money from the fines will be distributed to Longfin investors.

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What’s your opinion about the fines imposed on the two companies given the size of the amounts raised in their offerings? Tell us in the comments section below.

Images courtesy of Shutterstock.

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The post SEC Imposes Multimillion Dollar Fine for Unregistered EOS Token Sale appeared first on Bitcoin News.

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