Dan Larimer

Block.one co-founder Dan Larimer spoke in June about the company’s social media network at an event in Washington, D.C.

Blacksburg startup Block.one agreed to pay $24 million to settle civil allegations that the company broke U.S. securities rules while raising billions to advance its blockchain technology business.

The company responded to the sanction with a brief statement declaring the matter resolved and plugging entrepreneurship and emerging technologies, including its push for transparency, decentralization and equity.

It said it neither admitted nor denied the allegations by the U.S. Securities and Exchange Commission. The matter was closed Sept. 30 based on a company settlement offer, the commission said.

A week earlier, 3-year-old Block.one revealed a $10 million investment to establish its headquarters in Arlington. It is the self-described “publisher of [the] high-performance blockchain software EOSIO” and prominent in the emerging industry.

“We are excited to resolve these discussions with the SEC and are committed to ongoing collaboration with regulators and policy makers as the world continues to develop more clarity around compliance frameworks for digital assets,” the company statement said in part.

Blockchains are digital ledgers maintained by a massive network of users to store information and manage transactions online in new ways. Although the cryptocurrency Bitcoin is the best-known application, developers are finding new uses. Some say the industry could grow in Southwest Virginia based on Block.one’s initial success.

The state-funded GO Virginia economic program committed $246,800 to commercializing blockchain-based ventures in the Roanoke-Blacksburg region. To be run by Virginia Tech, the project — the Blockchain Ecosystem Catalyst — also lined up funds from the Virginia Tech Foundation.

“I still have confidence in them,” foundation CEO John Dooley said Tuesday after reading about the government’s administrative proceeding against Block.one.

He called the company “a very important component of the local innovation, economic effort and we continue to look forward to working with them to advance the blockchain technologies that will be of benefit to society.”

Block.one raised several billion dollars worth of digital currency in 2017 and 2018 through its own digital currency sale, but failed to register the sale with the securities commission or deliver required information to the public in advance, the commission alleged. That left purchasers without key information they needed to make informed investment decisions, the government contended.

Block.one isn’t registered with U.S. securities regulators “in any capacity,” the government said.

The government’s case decision credited Block.one, which is based in the Cayman Islands and has offices in Los Angeles and Hong Kong, with making efforts to ban parties in the U.S. from the online sale, but said those efforts were inadequate and that some purchasers were U.S.-based.

The sale was an initial coin offering of 900 million ERC-20 Tokens between June 26, 2017, and June 1, 2018, for which the company received “the equivalent of approximately $4.40 per token,” the case decision said. That would work out to $3.96 billion and the company had yet to launch its product.

Block.one advertised that it planned to use the money to “build a blockchain consulting business focusing on helping businesses reimagine or build their businesses on the blockchain,” according to the case decision.

Dan Larimer, a Virginia Tech computer science graduate and company co-founder living in Christiansburg in 2018, told The Roanoke Times at that time that his mission is to “find free market solutions to securing life, liberty, property and justice for all.”

Jeff Sturgeon covers business, banking, transportation and federal court. Phone: (540) 981-3251. Email: jeff.sturgeon@roanoke.com. Mail: 201 W. Campbell Ave., Roanoke, VA 24011.

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