The Securities and Exchange Commission (“SEC”) sent a cease and desist letter to Bloom Protocol, demanding it register the token as a security or face up to 31 Million in fines. Bloom quickly agreed to register and take other remedial actions.

The letters summary states;

“1. Bloom, a technology start up, was founded in August 2017 by three students and
another individual, all of whom were living in the United States. At its founding, Bloom’s
purported goal was to “revolutionize” the credit scoring industry by moving identity attestations
and credit scoring to a blockchain.

2. From November 14, 2017 to January 2, 2018, Bloom continuously offered and sold
crypto assets known as Bloom Tokens (“BLT”), which were issued on a blockchain or distributed
ledger. Bloom raised approximately $30.9 million from 7,358 worldwide investors, including U.S.
investors, through this initial coin offering (“ICO”). Bloom did not register the offering with the
Commission, nor did it qualify for an exemption to the registration requirements.

3. Based on the facts and circumstances set forth below, BLT were offered and sold as
investment contracts, and therefore securities, pursuant to SEC v. W J. Howey Co., 328 U.S. 293
(1946) and its progeny, including the cases referenced by the Commission in its Report of
Investigation Pursuant to Section 21(a) of The Securities Exchange Act of 1934: The DAO
(Exchange Act Rel. No. 81207) (July 25, 2017) (the “DAO Report”). A purchaser in the offering
of BLT would have had a reasonable expectation of obtaining a future profit based upon Bloom’s
efforts in using the proceeds from the offering to create an online identity attestation system that
would increase the token’s value on crypto asset trading platforms. Bloom violated Sections 5(a)
and 5(c) of the Securities Act by offering and selling BLT without having a registration statement
filed or in effect with the Commission or qualifying for an exemption from registration with the
Commission”

Consult an attorney that understands blockchain and securities law to help avoid issues like this.