The Securities and Exchange Commission is reportedly looking into a number of ICOS that were completed last year.
It has “issued dozens of subpoenas and information requests” to technology companies and advisors involved in the cryptocurrencies market according to the Wall Street Journal, which cited sources.
The SEC is looking at the sale structure and pre-sale model of ICOs, which are not as heavily regulated as public offerings. Pre-sales are not subject to the same rules as public offerings, and the regulator has made attempts to determine whether ICOs, which use cryptocurrency tokens to raise funds or companies, violate existing securities law.
A spokesperson for the Securities and Exchange Commission did not immediately respond to a request for comment.
Last month, the SEC filed charges against a former cryptocurrency exchange and its founder. The commission alleged that BitFunder and founder Jon E. Montroll operated an unregistered securities exchange and defrauded its users by misappropriating their bitcoins. It also charged the operator with making false and misleading statements in connection with an unregistered offering of securities.
In the same month, the regulator also put the brakes on an initial coin offering (ICO) that was seeking to raise up to $1bn to develop ‘the world’s first decentralized bank’. Dallas-based AriseBank was ordered to stop its fraudulent ICO and refund investor’s money, with the SEC reporting that ‘it used social media, a celebrity endorsement, and other wide dissemination tactics to raise what it claims to be $600m of its $1bn goal in just two months’.
Its charges against BitFunder and Arise Bank came two months after the regulator filed charges against two organisers of a $15m initial coin offering (ICO). Quebec-based Dominic Lacroix and Sabrina Paradis-Royer, along with a firm called PlexCorp, were all charged with violating U.S. securities laws and defrauding investors.
With cryptocurrencies growing in popularity, there have been calls on the government to introduce appropriate regulation to protect both the consumer and businesses. However, seven cryptocurrency companies recently formed a UK cryptocurrency trade body, bringing the first self-regulation to the industry, while a group of Japanese cryptocurrency exchanges were also reported to be following suit with self-regulation.
Copyright © 2018 RegTech Analyst
Copyright © 2018 RegTech Analyst
