In response to China’s ICO ban, crypto startup block.one has banned Chinese residents from participating in the initial coin offering for smart contracts platform EOS. Beginning this morning, all EOS ICO contributions violating this policy will be considered “null and void.”
The announcement, which block.one posted on Steemit, is a direct response to a report that the People’s Bank of China (PBoC) has declared ICOs illegal and has ordered groups who have already completed crowdsales to return funds to investors.
From now on, block.one explicitly bars residents and citizens of China from contributing to the EOS ICO, which raised $185 million during its initial phase in June and will continue until June 1, 2018.
Chinese persons are strictly prohibited and restricted from using the EOS Smart Contract and/or purchasing EOS Tokens. If a Chinese person uses the EOS Smart Contract and/or purchases EOS Tokens, such person has done so and entered into the EOS Token Purchase Agreement on an unlawful, unauthorized and fraudulent basis and such agreement will be null and void.
The announcement was careful to state that EOS tokens do not constitute a “security” under Chinese securities law and are thus not “illegal fund raising.” However, block.one “decided as a matter of prudence” to begin blocking Chinese contributions.
The EOS ICO was already closed to U.S. investors, although that prohibition was somewhat dubious. The EOS website blocks U.S. IP addresses from accessing the token sale page, but U.S. residents can easily circumvent that restriction with a VPN. Additionally, the block.one had advertised for EOS in Times Square, which would seem like a poor use of marketing revenue if they truly sought to block U.S. investments.
Presumably, Chinese investors will have the ability to take the same measures to circumvent the ban. However, China has begun cracking down on VPN providers, making it difficult for people who are not tech-savvy to slip through the Great Firewall.
China’s ICO ban pummeled the crypto markets, but EOS was one of the coins hit the hardest. In the past day, the EOS price fell from $1.24 to a present value of $0.93.
This represents a daily decline of 24% and reduces EOS’s market cap to $303 million.
Featured image from Shutterstock.
Last modified: May 21, 2020 9:16 AM UTC