Block.one operates in Hong Kong and Virginia and conducted the allegedly unregistered IPO from June 2017 to June of 2018. According to the SEC, Block.one was accused of using the capital raised for software development, expenses and to promote its blockchain product. “A number of U.S. investors participated in Block.one’s ICO,” said Stephanie Avakian, co-director of the SEC’s Division of Enforcement. “Companies that offer or sell securities to U.S. 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 company allegedly offered and sold 900 million tokens totaling several billion dollars in digital assets. According to the regulator, the ICO did not meet federal securities laws, and it did not qualify for any exemptions of said registration requirements. “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 Division of Enforcement. “The SEC remains committed to bringing enforcement cases when investors are deprived of material information they need to make informed investment decisions.”
The company did not admit or deny the SEC's findings.
Despite Progress, Fintechs Continue to Confound the Public
The FINRA Investor Education Foundation (FINRA Foundation) released new research showing scams with the "highest engagement and victimization rates" come with respect to social media and online purchases. They beat out mail, phone and email fraud. Socially isolated individuals, and those with "low financial literacy" are more likely to be ripped off, the research reads.
“Despite the enormous personal and financial costs of fraud victimization, few studies have explored the process of fraud victimization and the factors associated with losing money,” said FINRA Foundation President Gerri Walsh. “Our goal is to better understand the conditions under which scam targets do not become victims in order to develop more focused and effective public education tools and strategies to protect consumers.”
In the same vein, Financial Crimes Enforcement Network (FinCEN) Director Kenneth A. Blanco, recently spoke at the 2019 Federal Identity (FedID) Forum and Exposition and warned consumers about the dangers of identity theft and fraud. He said the digital age comes with a bevy of risks and noted identity theft is a national security matter. "In some cases, cybercriminals appear to be using fintech data aggregators and integrators to facilitate account takeovers and fraudulent wires. By using stolen data to create fraudulent accounts on fintech platforms, cybercriminals are able to exploit the platforms’ integration with various financial services to initiate seemingly legitimate financial activity while creating a degree of separation from traditional fraud detection efforts," he said.
He added that with brokers and companies housing billions of data points, like emotions, biometrics, habits and reputations, both the risk for illicit activity and the value to companies and law enforcement is increasingly evident. "From the days of wax seals that provided integrity for communications in the Middle Ages to today’s use of machine learning-supported heuristics and facial recognition technology, the concept of identity and how to manage it continues to evolve," said Blanco.
