Blockchain Company Settles SEC Charges For Conducting Unregistered Token Offering

A Delaware-based blockchain company settled SEC charges for offering and selling digital tokens, in violation of securities registration requirements.

In an SEC administrative proceeding, the agency alleged that Blockchain of Things, Inc. ("BCOT") did not register its digital token, as required by federal securities laws. Prior to the offering, BCOT released a white paper explaining that the tokens could be converted into "credits" for services on a separate BCOT platform. This separate platform - known as Catenis - was designed to help app developers create new products by simulating an "ecosystem of third-party apps." The SEC determined that the token should have been registered as a security because the Catenis platform (i) was in a "beta" stage at the time of the offering, (ii) lacked restrictions on the conversion from tokens to Catenis credits, (iii) led purchasers to believe they could profit from the token if BCOT was successful, and (iv) did not clearly