They are also preparing to supplement their efforts at a federal level within the US, now under the SEC. The active participants on this front are Texas and Massachusetts. Recently, New York also issues a blistering report regarding a cryptocurrency exchange status. Colorado together with North Dakota lies amongst the latest ones to announce their enforcement actions in opposition to crypto businesses.
Colorado initiates numerous administrative actions namely show cause orders. They have an issuance of 2 cease and desist orders for fraudulent security offerings in the form of ICOs. Following this, In October and September, North Dakota also issues an advisory alert together with security enforcement action in opposition to ICO issuers.
These latest actions again underscore the risks to ICO issuers who do not comply with applicable securities laws. There are two simple rules at play.
- If a financial instrument is a security, irrespective of its name and how it has been marketing. Its offer and sale must get registration with the SEC as well as applicable states. However, an exemption regarding the registration must be available in every affecting jurisdiction.
- All marketing efforts either written docs or oral statements belonging to potential investors must neither omit nor misstate any material facts relating an offering.