Blockchain Firm to Pay SEC $24 Million for Unregistered ICO

The SEC has settled charges against blockchain technology company Block.one, which will pay a $24 million penalty for conducting an unregistered initial coin offering (ICO).

Block.one is a technology company that was established in 2016 to develop EOSIO software, an operating system designed to support public or private blockchains. The goal of the EOSIO software is to increase blockchain transaction speeds, reduce transaction costs, and improve scalability.

According to the SEC’s order, Block.one conducted an ICO between June 2017 and June 2018, and said it would use the capital raised for general expenses, to develop the EOSIO software, and promote blockchains based on the software.

Block.one’s offer and sale of 900 million tokens, known as ERC-20 tokens, eventually raised several billion dollars worth of digital assets globally, and included investors from the US. However, according to the SEC, Block.one did not register its ICO as a securities offering pursuant to the federal securities laws, nor did it qualify for or seek an exemption from the registration requirements.

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“A number of US investors participated in Block.one’s ICO,” Stephanie Avakian, co-director of the SEC’s Division of Enforcement, said in a release. “Companies that offer or sell securities to US 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.”

The SEC’s order said that Block.one sold and distributed tokens directly through the EOS.IO website in exchange for Ethereum tokens. The website included measures to block US-based purchasers from buying tokens, including blocking US-based IP addresses from accessing the website’s token sale page. Block.one also required all token purchasers to agree to a token purchase agreement, which included provisions that US citizens were prohibited from purchasing the tokens, and that any purchase by a US person was unlawful and would render the purchase agreement null and void.

“Block.one did not, however, ascertain from purchasers whether they were in fact US-based persons,” said the order, “and a number of US-based persons purchased ERC-20 tokens directly through the EOS.IO website.”

Block.one also promoted the ICO in the US via social media and forum posts, and participated in blockchain conferences in the US. The SEC said Block.one failed to provide ICO investors the information they were entitled to as participants in a securities offering. Block.one consented to the SEC’s order without admitting or denying its findings.

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Tags: Block.one, Blockchain, EOSIO, SEC

The Oslo-based Government Pension Fund Global announced on Wednesday that it will remove upstream oil and gas companies from its $1 trillion portfolio. The loss of $5.5 billion in equity follows a June proposal from the Ministry of Finance to move away from financial instruments associated with volatile oil prices.

Since 2018, a rash of entities have ducked for cover from risky energy firms that identify, extract or produce raw materials from deposits, drill wells or underground. Last week, ExxonMobil sold its upstream operations in Norway for $4.5 billion. In August, BP divested $5.6 billion of its upstream assets in Alaska. In July, French multinational oil and gas operator and supplier Total divested about $5 billion of several non-core upstream assets to Petrogas, the energy exploration and production subsidy of Oman-based MB Holding. Four months earlier, Houston-based Wishbone Energy divested $300 million in Texas- and Mexico-based upstream assets.

Exploration and production companies accounted for .8 percent of the Norway fund’s portfolio in August. The FTSE Global All Cap fund, an equity benchmark index, recently reclassified upstream energy companies, a process that will be complete in September 2020.

In a September 11 letter to the Ministry of Finance, Oystein Olsen, governor of Norway’s central bank, and Yngve Slyngstad, CEO of Norges Bank IM, which manages the fund, wrote that, “It is reasonable to assume that the market will know which stocks the the bank will be selling as aprt of this phase-out.”

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Norway’s central bank recommended the move in November 2017, but the Ministry of Finance floated the proposal in March. A few months later, the fund pledged to invest in wind, solar and other renewable energy projects, both listed and unlisted.

Oil is on a downward trend. Since October of 2018, crude oil prices have fallen about 45% from 9.09 to 4.16.

The list of institutions that are steering clear from fossil fuel investments in general is growing. Last year, Ireland became the first country to divest its public fund from fossil fuels, with Royal Dutch Shell divesting $1.3 billion of its upstream oil and gas interests there. The World Bank has stopped funding new oil and gas developments.