Unregistered ICO Blockchain of Things falls against the ax of US SEC

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Initial coin offerings (ICOs) have often been seen as nothing more than a sham, with the vast majority of the programs either resulting in no viable product or simply vanishing into thin air. The U.S. Securities and Exchange Commission (SEC) has been spending more time going after the companies that launch ICOs in an attempt to protect consumers and has now come down hard on another one. The ICO launched by a company out of New York, Blockchain of Things (BCOT), has been invalidated by the commission and BCOT executives are now going to have to return all the money they received from investors. 

According to an announcement by the SEC, BCOT’s ICO was illegal because it hadn’t been registered properly as a securities offering. As a result, the company has to repay $13 million to investors and pay another $250,000 in penalties. The refunds will be made only to those investors who request it, so it’s possible that BCOT might be able to hold onto some of the money. 

The SEC’s Division of Enforcement Associate Director, Carolyn M. Welshhans, explains in the release, “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.”

BCOT was reportedly putting together a platform that would allow third-party developers to create messaging apps for transmission on the blockchain, as well as digital asset creation and transmission. The company’s tokens were made available to investors in the U.S., as well as some other countries, and introduced its ICO to develop the platform in December 2017. 

This move by the SEC doesn’t mark the end of BCOT’s operations. The company has acknowledged that it may have mistakenly sidestep securities laws, but will be able to move forward with its plans. However, it will now have to register its tokens as securities and turn in reports periodically with the SEC. 

The announcement comes only days after the SEC pulled the plug on another ICO. Last week, the commission announced that it had brought charges against UnitedData and its founder, Eran Eyal, for introducing an ICO for the Shopin platform and its associated tokens. In that case, Eyal reportedly took money out of the company to cover his own expenses and purchases.