US Cracks Down as Crypto Fraud Heats Up

The U.S. Securities and Exchange Commission (SEC) has sent dozens of subpoenas and requests for information to cryptocurrency companies and their consultants amid a torrent of initial coin offerings.

The SEC subpoenas demand details on the framework of sales and pre-sales of initial coin offerings, or ICOs, which are unconstrained by strict regulation of initial public offerings of stock, or IPOs.

The SEC has intensified its enforcement activity in the market for initial coin offerings, which often unfold beyond the reach of securities laws intended to protect investors.

Jay Clayton, chairman of the SEC, said in a speech that he directed staff to watch for “approaches to ICOs that may be contrary to the spirit” of securities laws.

In January, the SEC stopped a crypto coin offering by AriseBank, a Dallas-based company that allegedly misled investors into believing it would use the offering proceeds to acquire a federally insured bank.

AriseBank claimed that it raised $600 million.

The SEC has focused in particular on pre-sales of initial coin offerings, in which investors buy rights to acquire cryptocurrency coins prior to their issuance.

Pre-sales commonly take the form of so-called SAFTs, or simple agreements for future tokens. These agreements have raised concern at the SEC that investors are trading them like securities without complying with federal regulation of securities trading.

But neither the SEC crackdown nor the fall in the value of bitcoin and other cryptocurrencies from their all-time highs in December has slowed the pace of initial coin offerings.

ICO billions

According to Token Report, a research firm, initial coin offerings that closed have raised approximately $1.66 billion this year, a pace that would lift ICO proceeds in 2018 above last year’s $6.5 billion.

Research by Token Report also shows that approximately 480 initial coin offerings were launched last year, and just 126 of them have closed to additional investors.

Two of the largest issuers of initial coin offerings that haven’t yet closed, Telegram Group Inc. and block.one, have raised combined proceeds in excess of $2 billion so far.

Block.one, which launched its offering of tokens last summer and plans to keep it open through June, has raised $1.5 billion.

Block.one has said it will use proceeds of the offering to develop services that run on an operating platform similar to bitcoin’s and comparable to Android, which Google designed to host a wide variety of apps.

Telegram, which distributes a software application for online messaging, has raised $850 million.

Founded in 2013 and based in the British Virgin Islands, Telegram has said it will use the coin offering proceeds to develop a network for hosting such services as file storage, which would be available by payment in a new crypto coin called TON.

Recommended Articles

7 Warnings Signs of a Recession

The 2018 has not been a banner year for the stock market. Warning signs of a recession are becoming more obvious, according to some economists and market pundits. The Dow

Keeping More: How Does a Student Loan Affect Taxes?

Filling out your taxes correctly can be a challenging process, especially for those with student loans. But how does a student loan affect taxes? Many ways, starting with deductions. It

Migraine Pain? Here Are the Best and Worst Foods

Food can be your friend or your foe. Particularly for migraineurs, food can be a serious trigger for a headache, or it can bring a blessed relief from pain. Here

5 Major Money Decisions Before You Retire

It is said that retirement is a lifelong journey and not a destination. For many aspiring retirees, it may be a road to nowhere. Over 22% of Americans have less

Buying a Home? Avoid These 8 Killer Mistakes

Buying is home is not easy. You need to line up credit, decide how much house to buy, find the house, deal with realtors and the sellers. It can be

Body Odor: The Real Reasons Why You Stink

Body odor can be a really embarrassing condition. Unfortunately too many people deal with this common problem by washing more often with antibacterial soaps and body washes, and applying products

4 Powerful Passive Income Ideas That Can Boost Income

Do you enjoy exchanging hours for pay? This form of compensation is common, but most people dread it. What if you could instead get paid whether you work or not?

8 Tips for Efficiently Managing Your Small Business Finances

Managing your small business finances is crucial. Small to medium-sized businesses need financing but they lack enough of it — to the tune of $5 trillion, according to the SME Finance

The One Chart That Could Be a Game Changer for Investors

Allow me to present one chart to you that could indeed prove to be a game changer for investors and financial markets going forward. See below. What are we looking

6 Cultures That Promote Longer Lives and What We Can Learn From Them

Okinawa is renowned for its ability to produce long-living citizens and centenarians, or individuals who live past 100 years of age. What’s their secret? Their bodies age more slowly than

Seniors Finding Jobs in the Gig Economy Created by Millennials

A growing number of seniors finding jobs are doing so by joining the gig economy. According to a 2017 Prudential Financial survey, around 31 percent of gig economy workers are

Viagra for Women — Is a Pill Really the Best Answer for Igniting a Woman’s Sex Drive?

There is a new drug going up for FDA approval called Flibanserin. This medicine is being called “Viagra for women.” The FDA has already denied approval of this medication twice