Blockchain Firm Penalized for Distribution of an Unregistered ICO

A blockchain services company settled SEC charges in connection with the distribution of an unregistered initial coin offering ("ICO").

According to the SEC, the company raised over $25 million by selling what it called its "Consumer Activity Tokens" to nearly 9,500 investors, including U.S. investors. The SEC found that the tokens were securities, and that the company violated Securities Act Sections 5(a) and 5(c) by distributing the tokens without registration.

Without admitting or denying the charges, the company agreed to (i) cease and desist, (ii) disgorge $25.5 million, (iii) a $400,000 penalty, and (iv) pay $3,444,197 in prejudgment interest. The order establishes a Fair Fund to return money to harmed investors. Additionally, the company agreed to surrender all its remaining tokens to the fund administrator so they can be permanently disabled, and to request the removal of distributed tokens from trading platforms.