Aug 11, 2022

Blockworks | Shalini Nagarajan | Aug 10, 2022 Crypto startup Bloom Protocol has been ordered by the SEC to register its tokens or face a $31 million fine. The regulator issued a cease-and-desist order to the company on Tuesday, accusing it of offering unregistered securities. Bloom violated the Securities Act by offering and selling Bloom Tokens (BLT) in an unregistered initial coin offering (ICO) between November 2017 and January 2018, the order said. The Gibraltar-registered firm managed to raise $30.9 million from nearly 7,400 investors around the world, including in the US, which means the SEC plans to fine Bloom for the amount of crypto raised in its ICO. Founded in 2017, Bloom describes itself as a blockchain-powered solution for credit scoring that aims to reduce the risk of identity theft. It claims its system minimizes fraud and reduces the cost of customer onboarding. Bloom promoted BLT as investment contracts which inherently marks them as securities, in line with the Howey Test , according to the SEC. “A purchaser in the offering of BLT would have had a reasonable expectation of obtaining a future profit based upon Bloom’s efforts…to create an online identity attestation system that would increase the token’s value on crypto asset trading platforms,” the regulator said. Bloom allegedly told prospective investors its limited presale was “oversubscribed” and that it raised a “hard cap of $50m total.” The average investment during the pre-sale was $340,000, and the average during the public sale was $2,000, regulators found, which when calculated, doesn’t add up to the advertised cap. Bloom is expected to register BLT as a class of securities within 270 days and inform investors about potential claims to recover their money within 60 days. It has been ordered to fulfill all payments to investors within three months of the claim form’s submission deadline. The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org Support NCFA by Following us on Twitter!