- Cardano’s co-founder and CEO Charles Hoskinson believes that SEC will crack down on EOS with regulatory actions
- This is because of EOS’ $4B ICO, which Hoskinson sees as egregious and fits well within the regulator’s responsibilities
- Hoskinson also thinks that what happened to Paragon and AirToken are easy examples of what could happen to EOS
During the Cardano PlutusFest conference, Cardano’s co-founder and CEO Charles Hoskinson shared his thoughts on how EOS is likely to face regulatory backlash as it faces SEC scrutiny. Hoskinson believes that the platform will be under SEC’s watchful eyes due to its $4B ICO, which he described as egregious.
Harming US investors
Hoskinson has stated that Block.One, the main block producer, will also be under the SEC’s punitive measures for the way it ran the EOS ICO. The Cardano CEO even said that EOS’ token sale fits well within the regulator’s responsibility to take action since it is against any financial activity that can harm US retail investors.
While American citizens were not allowed to take part in the ICO, EOS tokens could be easily purchased in the secondary markets without even the need for a KYC. This is another reason why Block.One could still be under the jurisdiction of SEC.
In fact, SEC has already ordered refunds for two ICOs, after concluding that their tokens were unregistered securities. These two ICOs are Paragon and AirToken, which Hoskinson referred to as “low hanging fruits.” He thinks that these are easy examples of the possible case law. It serves as a warning that regulators will soon crackdown EOS and Block.One. Hoskinson even thinks that EOS’ creators will be fighting these regulators, and will use the crowd sale funds to continue with a court action.
EOS’ ICO and Cardano
EOS and Cardano are blockchain platforms. Both are designed to help developers, providing them a base-layer to build decentralized applications and features for dApps.
Thanks to the Initial Coin Offerings last year, Blockchain startups managed to raise over $5bn. Some of the projects even hit their hard cap within just minutes after they have opened the sale. Since EOS has been hosting a year-long crowdsale, they managed to raise over $4bn. This only ended on June 1, 2018, making it the largest ICO in history.
The problem is EOS has experienced issues six months after the ICO. Some of these issues include a chaotic mainnet launch which was delayed repeatedly for days. In the same month, hackers stole Block.One’s address and managed to send phishing emails to various platform users. On top of these issues, EOS was under a different criticism for reversing confirmed transactions.
On the other hand, Cardano has had its own share of challenges. In October, they experienced a public spat between IOHK and the Cardano Foundation. This ended in IOHK assuming temporary control of the Foundation. In a Crypto Briefing, Hoskinson said that it had been a hindrance to the project’s development in the short term.