Saturday, 20 October, 2018

Bitcoin price falls after report that SEC is launching ICO probe

Securities and Exchange Commission Bitcoin price falls after report that SEC is launching ICO probe
Nellie Chapman | 02 March, 2018, 08:41

The fact the Securities and Exchange Commission has been issuing subpoenas to initial coin offering (ICOs) issuers has been rumored for quite some time. In December, a new SEC cyber unit took its first action, halting an allegedly fraudulent ICO. Whether or not this is going to put a crimp in the ICO business is open for debate, however, I bet those that want to issue an ICO in the future are going to be very careful when they do so.

Gallagher told an SEC conference in Washington last week that the largely unregulated token offerings are "the freaking Wild West-it is "Wolf of Wall Street" on steroids", according to WSJ. They are not following securities laws.

Numerous cryptocurrency-related subpoenas were issued in recent weeks, likely paving the way for what lawyers and industry insiders expect to be a dramatic upturn in enforcement activity. Unlike public offerings, ICOs aren't heavily regulated, the report stated. In an ICO, investors swap both real or cryptocurrency such as Bitcoin for "tokens" for the crowdfunded cryptocurrency that's being offered. Instead of viable products and strong development teams, the SEC fear these inflated prices and hype driven markets could burn retail investors.

The SEC has cracked down on some ICOs over the last six months, but the approach has been scattershot and affected relatively few.

The demands for information are the most concrete sign of the SEC's intention to crack down on the sudden emergence of coin offerings. "To be blunt, from what I have seen recently, particularly in the initial coin offering space, they can do better". Their clients then proceed with the ICO without complying with the securities laws because those clients are willing to take the risk. He added that SEC-determined compliance would make ICOs more expensive. "So hopefully this would create a more mature market", he said. Both Chairmen repeatedly emphasized the SEC's and CFTC's missions to establish a regulatory environment for investors and market participants that fosters innovation, integrity, and confidence.

However, the company is a holding, often one of the largest, of the blockchain-focused exchange-traded funds that launched in January. With that kind of investment happening regulatory bodies are going to have to get involved.