The United States Securities and Exchange Commission (SEC) has scored a partial win in its legal battle against blockchain firm Opporty International and its owner, Sergii Grybniak, as reported by Cointelegraph. The case centers on allegations that Opporty conducted a fraudulent initial coin offering (ICO) by selling unregistered securities.

In a ruling dated September 24, U.S. District Judge Eric Komitee determined that the SEC had successfully shown that Opporty and Grybniak unlawfully offered unregistered securities in the U.S. The SEC’s legal action against the firm was initiated in January 2021, alleging that they had conducted a fraudulent ICO by selling “unregistered digital asset securities.”

Judge Komitee classified the “OPP” tokens sold during Opporty’s ICO as investment contracts under federal securities laws, which necessitates registration with the SEC. The SEC contended that the ICO pre-sale violated Section 5 of the Securities Act of 1933, which governs the registration and distribution of securities.

Throughout the proceedings, Grybniak argued that the token sale was exempt from registration under Reg D/S exemptions, which apply to non-public offerings and transactions involving accredited investors or sales occurring outside the U.S. However, Judge Komitee found Grybniak’s defense reasonable yet ultimately sided with the SEC, stating that Opporty and Grybniak did not fulfill the exemption criteria of Regulation S due to their “directed selling efforts” within the U.S.

The Opporty ICO, which ran from September 2017 to October 2018, raised approximately $600,000 from nearly 200 investors both domestically and internationally. The SEC alleged that Opporty violated its regulations by failing to register the token sale. Opporty had positioned itself as a “blockchain-based ecosystem for small businesses and their customers,” primarily focusing on the U.S. market and aimed at enabling small businesses to list their services and enter agreements through smart contracts.