ICO issuers settle SEC registration charges

Lloyd Doyle
November 19, 2018

The U.S. Securities and Exchange Commission (SEC) recently announced that two cryptocurrency startups have settled charges with the SEC & agreed to register their initial coin offering ICO tokens as securities.

Both firms, Carrier EQ (Airfox) and Paragon Coin sold digital tokens in ICOs in 2017 after the regulator's official stance on the ICO.

A more serious issue for ICOs is that as the SEC reaffirmed in its document, investors in ICOs considered securities under the existing guideline of the SEC have the right to sue projects to be compensated for their losses.

"As I said when my office first began its sweep of ICOs previous year, there is little question that many of these ICOs constitute securities offerings which need to be registered or exempt from registration in the Commonwealth", Massachusetts Secretary of State William F. Galvin said in a statement. "These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets", Stephanie Avakian, Co-Director of the SEC's Enforcement Division, said. The SEC found that the companies' tokens, the virtual currency used to support the ICOs, should have been registered as securities, or investments that will make returns for investors should the companies be successful. The price of many tokens has since collapsed 90% amidst the popping of the crypto bubble, and as numerous projects touted in the ICOs have failed to materialize as promised.

Investors who invested in two cryptocurrency startups previous year could be eligible for refunds following a settlement with the US Securities and Exchange Commission. Airfox raised $15 million through its sale, while Paragon raised $12 million, according to statements. According to the federal agency, both Airfox and Paragon have consented to the SEC's orders without admitting or denying the findings.


Nevertheless, the bill would complement the recent tendency of crypto and blockchain firms to turn to venture capital (VC) funding rather than ICOs, in a bid to circumvent the complexities of securities laws and the increasingly stringent oversight of the SEC.

The Securities and Exchange Commission (SEC) fined 2 startups performing illegal ICOs $250,000 and obliged them to provide refund opportunities to their investors.

SEC's representative claimed that the regulator made it clear that the companies who issued securities with the help of the ICO should have been up to registration standards.

What are your thoughts on the two ICOs being ordered to register their tokens as securities?

Other reports by Iphone Fresh

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