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How Block.One Got Away With Just a $24 Million Penalty

Heads up, everybody! We are launching a weekly news recap, so stay tuned after the interview to find out about the top stories in crypto this week! (Links below.)

Zachary Fallon, principal at Blakemore Fallon and former SEC staffer, explains why the SEC penalty against Block.One, which raised $4 billion in a yearlong ICO, got a penalty of just $24 million and didn’t have to register EOS tokens as securities. He also discusses how this differs from the Kik case, what we can learn from another SEC order this week against Nebulous and what other gray areas remain for potential token issuers who may want to sell to U.S. citizens. We also go over the Crypto Rating Council, and what significance those ratings could have on the way they are regulated, if any.

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Episode links: 

SEC press release about the Block.One settlement: https://www.sec.gov/news/press-release/2019-202

SEC Order re. Block.Onehttps://www.sec.gov/litigation/admin/2019/33-10714.pdf

Cooley letter on Block.onehttps://www.sec.gov/divisions/corpfin/cf-noaction/2019/block.one-093019-506.pdf

Katherine Wu’s annotated settlement: https://static1.squarespace.com/static/5ac136ed12b13f7c187bdf21/t/5d92c33d937a3466c0c723a9/1569899329538/33-10714.pdf

SEC action on Nebulous: https://www.sec.gov/enforce/33-10715-s

Jake Chervinsky tweet storm on the settlement: https://twitter.com/jchervinsky/status/1179162527541993472?s=20

Marco Santori tweet storm on the settlement: https://twitter.com/msantoriESQ/status/1178811671621591040?s=20

Crypto Rating Council: https://www.wsj.com/articles/cryptocurrency-exchanges-including-coinbase-to-rate-digital-assets-11569835801

CRC ratings thus far: https://twitter.com/lawmaster/status/1178627290676301824?s=20

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