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The SEC Has Launched An Investigation Into Possible Digital Currency Offering Violations Of The U.S. Securities Laws: This Is the Beginning of SEC Regulation

ArmchairTechInvestor, February 26, 2018, by Brad Peery

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*A sweeping probe has been initiated by the SEC into possible securities violations by digital coin offering companies and advisors. Subpoenas and information requests have been issued to numerous companies involved in the raising of capital for digital coin or token companies (ICOs). The standards required of such companies may be substantially less than for public offerings. The money can be raised for even small niche products. According to SEC Chairman Jay Clayton: “Many promoters of ICOs and cryptocurrencies are not complying with our laws”.

As of February, 2018, coin offerings have raised $1.66 billion, and could be on the way to surpassing the $6.5 billion raised in a hot 2017 market, according to Token Report, a research and data company. Many of the projects for which money has been raised, have originate outside the U.S.

A study is underway by MIT. The statement has been made that $270 million to $317 million of the money raised for coins has likely gone to fraud or scams, according to Christian Catalini, an MIT professor.

In one of the first SEC initiated actions, Dallas-based AriseBank is apparently under investigation for claiming to it plans to buy a U.S. bank with the $600 million it claims it has raised. The offering was halted by the SEC in January, 2018. Many other offerings have apparently been delayed by increased SEC scrutiny.

An element of the increased scrutiny by the SEC relates to simple agreements for future tokens (SAFTs), which allow existing investors to buy coins or tokens prior to their being offered to the general public. The profits can typically be flipped or sold before the offerings.
*SEC Launches Crypto-Probe, Wall Street Journal, by Jean Eaglesham and Paul Vigna, March 1, 2018

ArmchairTechInvestor Opinion
Digital coin and token offerings in the U.S. are in the initial stages of being investigated and regulated by the SEC. This area is likely to be extensively regulated, but not as closely regulated as a traditional initial public offering (IPO).

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