SEC Publishes ICO Consent Order, Crypto Exchange Discloses SEC Investigation

This week, the U.S. Securities and Exchange Commission (SEC) published a consent order settling charges against Bloom Protocol LLC (Bloom) related to Bloom's 2017 initial coin offering (ICO). In the settlement, the SEC characterized Bloom's BLT token as a security because ICO purchasers "would have had a reasonable expectation of obtaining a future profit based upon Bloom's efforts in using the proceeds from the offering" and alleged that Bloom violated Sections 5(a) and 5(c) of the Securities Act by failing to register its token with the SEC. The settlement requires Bloom to register its token with the SEC and pay a $300,000 civil penalty. Among other things, the settlement also requires Bloom to publish a notice and a claim form "informing all persons and entities that purchased BLT ... before and including January 2, 2018, of their potential claims under Section 12(a) of the Securities Act, including the right to sue 'to recover the consideration paid for such