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 security with interest thereon, less the amount of any income received thereon, upon the tender of such security, or for damages if [the purchaser] no longer owns the security.'" If Bloom fails to comply with the settlement, it faces a $30.9 million fine. According to the order, Bloom has started preparing for registration by retaining an auditor and hiring additional audit and compliance staff.
In related news, in its most recent quarterly filing, a major U.S. cryptocurrency exchange disclosed that it had received investigative subpoenas from the SEC seeking information related to "processes for listing assets, the classification of certain listed assets, its staking programs and its stablecoin and yield-generating products." The company previously disclosed that it received similar investigative subpoenas related to the company's stablecoin and yield-generating products in its last quarterly filing in May of this year. The recent disclosure comes weeks after the SEC filed insider trading charges against a former employee of the company.
For more information, please refer to the following links:
- In the Matter of Bloom Protocol, LLC
- SEC Orders Crypto Biz To Register Tokens, Or Pay Up To $31M
- Coinbase Exchange Faces SEC Probe Over Crypto Yield, Staking Products
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