Failing to Satisfy SEC’s Demands
At the start of 2018, SEC issued subpoenas seeking initial information from various ICO. It has issued many more recently to more companies. The subpoenas focus on verifying sale of tokens to exclusively to accredited investors.
Yahoo and Decrypt report SEC is pressuring many of these companies to settle their cases. Whereas some have silently agreed to refund the investor money and pay fines. Many of the companies are trying, but most of them are in the dark struggling to satisfying SEC’s demands.
Many of the sources for this information is either the employees of the company or the lawyers of those companies have chosen to remain anonymous as SEC restricts from discussing the matter.
SEC Sees Most ICOs as Securities
Many of the companies that hosted ICOs offered ‘tokens’, either utility token or SAFT (Simple Agreement for Future Tokens, investors buy these tokens long before the launch). But SEC made clear it does not care about titles and wants to go over ICOs case-by-case.
SEC Chairman Jay Clayton says I believe every ICO I’ve seen is a security. After an ICO, The DAO collected over $150 million 2016. SEC issued investigative reports against DAO tokens. On July 25, 2017. William Hinman, the SEC’s director of corporation finance, issued a statement in June aligning with the views of SEC Chairman saying,
Ether does not appear to be a security, but suggested that most ICOs are securities offerings, and that, “calling the transaction an initial coin offering, or ‘ICO,’ or a sale of a ‘token,’ will not take it out of the purview of the U.S. securities laws.
The ICO regulations issued by SEC include selling only to investors outside the U.S. or selling only to accredited investors, which are individuals with income higher than $200,000 in each of the past two years or a minimum net worth of $1 million.
Death of ICOs
Just like IPOs, ICOs might be coming to an extinction. IPOs snuff out over the decade due to immense regulations in the US. And public companies, as a result, have been reduced by more than half, the same might be happening to ICOs.
You can also read:
- What is an ICO?
- UAE Regulators to Consider ICOs as Securities, Regulations by Mid 2019
- EU Securities Watchdog to Come up with ICO Regulations by End of 2018
- Thai SEC Reveals ICO Licensing Progress And Firm Issuing Token without License
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