Investigation points to irregularities during ICO conducted by EOS officials in 2018
Investigation points to irregularities during ICO conducted by EOS officials in 2018 By Angel Di Matteo @shadowargelThe

irregularities could involve legal charges for Block.one, the company responsible for EOS which raised over USD $4.2 billion during the ICO

that took place three years ago.

***

A new investigation revealed by the analysis firm Integra FEC reveals certain inconsistencies present during the ICO for the launch of EOS

in 2018, with what is presumed to be possible manipulation that could lead to legal consequences.

This was revealed by Integra FEC in their article published in collaboration with University of Texas finance professor John Griffin, both of whom point out that during the ICO conducted by EOS

there was a pattern of suspicious trades that inorganically raised the price of the digital currency. It is believed that this was intended to attract new investors by generating the feeling that it was a very good business opportunity.

Griffin commented

:

[EOS] was one of the largest ICOs and had a different mechanism for raising capital… It should not be assumed that prices simply represent actual supply and demand. Investors can get hurt.”

The irregularity seen in trading operations

As such, the research conducted by Griffin and the Integra FEC team identified 21 addresses that made unusually large purchases of EOS

on a regular basis, in quick succession, which incurred a process called recycling where purchases and sales are made in a row, with which they moved around USD $814 million, under the premise that a much larger amount of capital was actually moved.

Taking into account that EOS was the most successful ICO at the time at cap.

For Griffin and other analysts, the irregularities represent a clear manipulation of the prices of the token, which could even lend itself to legal charges against Block.one, the company responsible for it.

This was confirmed by Cornell Law School professor Robert Hockett, who reviewed the aforementioned research and supported the analysis conducted by the researchers in charge. He described the findings as impeccable and confirmed that they constitute a clear violation of U.S. law, clearly in the territory of the U.S. Securities and Exchange Commission (SEC).

EOS and the legal problems

While the new findings of Griffin and the investigators could represent legal irregularities, let’s keep in mind that already the SEC fined Block.one in 2019 precisely for the pre-sale of its token, on the grounds of not having made the respective registration for the marketing of the assets during the ICO.

As such, Block.one had to pay about USD $24 million for the aforementioned charges, but that wasn’t the only time the company faced legal hassles. In 2020, investors in the token sued the company for allegedly “false and misleading statements about EOS , which contributed to artificially inflated token prices and resulted in damages against purchasers.” The company settled with the plaintiffs and agreed to pay about $27.5 million in damages.

In relation to the latter, the plaintiffs alleged that EOS of having lied when they assured that the funds raised during the ICO would be used to create tools to promote the adoption of Blockchain technology , something that was not fulfilled as the capital was invested in other things.

Although EOS sold itself as a competitor to Ethereum, there are strong accusations against the project for congestion problems, the fact that its network is not fully decentralized, as well as other operational irregularities that harm users, which have led projects to migrate to other networks with better properties.

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Source: Integra FEC, Bloomberg, Decrypt

Version by Angel Di Matteo / DiarioBitcoin

Imagand the Unsplash