The US’ Securities and Exchange Commission (SEC) has slapped a $24 million penalty on cryptocurrency company Block.one for conducting an unregistered initial coin offering (ICO). The company was fined for selling unregistered ERC-20 tokens between June 2017 and July 2018. Block.one said that it accepted the settlement while “neither admitting nor denying” the SEC’s findings. ERC-20 is a protocol that defines certain rules and standards for issuing tokens on the Ethereum’s blockchain.

What did the SEC find? SEC’s investigation found out that Block.one raised “several billion dollars” as part of its ICO, but the company said that it would use the capital for general expenses, and also to develop software and promote blockchains based on that software. However, Block.one did not register its 900 million-token offering as securities in accordance with the federal securities laws, nor did it qualify for or seek an exemption from the registration requirements, the SEC said.

“Block.one did not provide ICO investors the information they were entitled to as participants in a securities offering,” said Steven Peikin, Co-Director of the SEC’s Enforcement Division.

How much capital did Block.one raise? The SEC’s order doesn’t specify how much capital Block.one raised following its ICO. But according to a CNBC report, the company raised $4 billion even before its token went live. This means that the fine on Block.one is a mere 0.006% of its ICO.

What did Block.one say? In a statement, the company said that since its ERC-20 token is no longer in circulation it will not require the token to be registered as a security with the SEC. The SEC has also granted Block.one “an important waiver” so that it will not be subject to “certain ongoing restrictions that would usually apply with settlements of this type,” the company said in a statement. The company had written to the SEC on September 30, 2019, seeking “a waiver of any disqualification that will arise under Regulation A and Regulation D” of the US’ Securities Act.

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