The Securities and Exchange Commission (SEC) has imposed a fine of $250,000 on Blockchain of Things Inc. (BCOT) for selling unregistered tokens via an initial coin offering (ICO).
The penalty was imposed as part of the settlement deal between the regulator and the ICO issuer. The SEC also ordered the company to return funds to all its investors.
In a token sale conducted in December 2017, just at the peak of the hype of the ICO market, BCOT raised nearly $13 million, and like most of the projects, it raised the money without having any working model.
According to the company, its platform was intended to allow third-party developers to build applications for message transmission and logging, digital asset generation, and digital asset transfer.
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ICO qualifying as unregistered securities
The US regulator alleged that the company was engaged in selling unregistered securities and also sold digital tokens to US-based investors.
“[The company] 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 U.S. investors,” the announcement stated.
The clampdown comes after the company failed to register its ICO pursuant to the federal securities laws as it did not qualify for an exemption from the registration requirements.
Mentioning the settlement, Carolyn M. Welshhans, associate director in the SEC’s division of enforcement, said: “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.”
Earlier this week, the regulatory agency charged blockchain project Shopin for defrauding hundreds of investors by raising $42 million with the selling of unregistered securities.