EOS Faces Class Action Lawsuit, Accused of Selling Tokens in Violation of U.S. Securities Laws

EOS, one of the world’s top ten cryptocurrencies, was recently reported by US investors, accusing the project team of using investors’ enthusiasm for cryptocurrencies to mislead investors to participate in their ICO (initial token offerings) that began fundraising in 2017, in violation of US Securities Law. At the same time, the EOS team repeatedly publicized the platform as decentralized, but the plaintiff claimed that the project was only manipulated by a few people, not decentralized as advertised.

The US cryptocurrency fund Crypto Assets Opportunity Fund (CAOF) and an individual investor earlier entered the Federal District Court in the Southern District of New York to sue the blockchain company Block.One and its project EOS, referring to the EOS team ’s one-year When raising funds through ICO, it intentionally misleads investors and raises the price of EOS tokens. This is a scam. It was mentioned that the EOS team used global investors, enthusiasm, and greed for cryptocurrencies at the time to promote related token issuance activities. This move also violates local US laws and immediately sells unregistered securities products. Therefore, the two plaintiffs hope to recover compensation from Block.One through the court.

The plaintiff also pointed out that the EOS team often described the project as decentralized in public and in its white paper. However, when the project was launched, a total of 21 block producers were obtained, and the entire ecology was actually controlled, not controlled by the project community. Its key parts in the governance system, such as arbitrators can freely cancel or freeze the transaction, but these circumstances were never disclosed during the ICO. The plaintiff cited Brock Pierce, the former chief strategy officer of Block.One, when he left in 2019. Pierce mentioned that EOS has been controlled by “a Chinese oligarch”.

EOS raised $4.1 billion from ICO in the year from June 2017 to June 2018, which was the most prosperous period of the ICO market. However, in September last year, Block.One reached a settlement with the US Securities and Exchange Commission (SEC) and agreed to pay $24 million USD in damages for the sale of unregistered securities in exchange for legal exemptions. At present, the price of EOS is $2.64 USD, and the market value is $2.464 billion USD, but it is 88.5% lower than the historical high of $22.89 USD.