The U.S. Securities and Exchange Commission continued to the very end of 2020 to pursue companies that engaged in ICOs without proper registration.  One December 23, 2020, the SEC settled charges against Texas-based blockchain startup company Tierion, Inc. for conducting an unregistered offering of securities in the form of a “token sale.”

According to the SEC’s order, Tierion raised approximately $25 million through the sale of “Tierion Network Tokens” (TNT) in July of 2017. The order finds that Tierion told investors that it would use the sale proceeds to fund the continued development of the “Tierion Network,” through which Tierion would offer a “blockchain receipt” service and other yet-to-be-developed services. The order also finds that, under the Howey test, TNT are securities, that Tierion did not register its token sale as a securities offering pursuant to the federal securities laws, and that the offering did not qualify for an exemption from the registration requirements.  The SEC’s order thus finds that Tierion violated securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933.

Under the settlement, TNT will permanently disable all TNT transfers by revising TNT’s code.  TNT will also make reasonable efforts to contact all digital asset market trading platforms where TNT trades, notifying them of the SEC’s Order and requesting that platforms halt all trading in TNT.  In addition, TNT agreed to set up a claims process under which investors who purchased the TNT tokens during the ICO would be offered repayment at “the USD value of the total TNT they purchased based on the price paid at the time of the token sale.”  And the claims process provides for compensation to those who lost money on the sale of TNT tokens in the secondary market.  TNT also agreed to pay a $250,000 fine.  TNT consented to the Order without admitting or denying its findings.

Unlike some others against which the SEC took action for improper ICOs. Tierion says it will remain in business.  In its press release, the company founder/CEO said, “Developers can continue to use Chainpoint in their applications. Once the process outlined in the settlement is complete, we’ll move forward with the next stage of deploying the Chainpoint Network.”


David Zaslowsky has a degree in computer science and, before going to Yale Law School, was a computer programmer. His practice focuses on international litigation and arbitration. He has been involved in cases in trial and appellate courts across the United States and before arbitral institutions around the world. Many of David’s cases, including some patent cases, have related to technology. David has been included in Chambers for his expertise in international arbitration. He is the editor of the firm's blockchain blog.