SEC’s Enforcement Division remains focused on issues related to ICOs and digital assets

Maria Nikolova

As of the close of FY 2018, the SEC had brought over a dozen stand alone enforcement actions involving digital assets and ICOs.

The Division of Enforcement of the United States Securities and Exchange Commission (SEC) continues to be focused on issues related to initial coin offerings (ICOs) and digital assets. This is indicated in the SEC Enforcement Division Annual Report for Fiscal Year 2018.

The report notes that over the last few years, the prevalence of crypto-asset offerings, including ICOs, has exploded. However, the exuberance around these markets often obscures the fact that these offerings may be high-risk investments. Moreover, some of the offerings are simply outright frauds misrepresented as emerging technology.

The Division has used public statements to send messages to the ICO and digital asset marketplaces on issues such as the potentially unlawful promotion of ICOs by celebrities and others, and the risks associated with online trading platforms for digital assets.

When warranted, the Division has recommended enforcement actions to the SEC in matters involving ICOs. As of the close of FY 2018, the SEC had brought over a dozen stand alone enforcement actions involving digital assets and ICOs. The full list of such actions is available here. FinanceFeeds has provided detailed coverage of a number of these actions, including the emergency action the SEC took against PlexCorps and its founders in December 2017, as well as the action against BitFunder and Jon Montroll.

While many of these cases have involved allegations of fraud, the Division also has launched enforcement actions to ensure compliance with the registration requirements of the federal securities laws. One example is the action against Longfin. In the past year, the Division has opened dozens of investigations involving ICOs and digital assets, many of which were ongoing at the close of FY 2018.

The Division’s focus also goes beyond the issuers of ICOs. In FY 2018, the Commission announced a settled order against two individuals who ran a self-described “ICO Superstore” that operated as an unregistered broker-dealer and participated in unregistered offerings. On the same day, the Commission filed a settled action against a hedge fund manager Crypto Asset Management LP (CAM) that violated an investment company registration provision based on its investments in digital assets.

The Division also has recommended that the Commission use its trading suspension authority to prevent investors from being harmed by possible scams. In both FY 2017 and FY 2018, the Commission suspended trading in the stock of over a dozen publicly traded issuers because of questions concerning, among other things, the accuracy of assertions regarding their investments in ICOs and operation of cryptocurrency platforms.

The most recent example of such a suspension dates from late October 2018. The SEC has suspended trading in the securities of American Retail Group, Inc. (ARGB), also known as Simex Inc, over making of false cryptocurrency-related claims. And, in April this year, the regulator announced a temporary suspension of trading in the securities of IBITX Software Inc. (IBXS), a New York corporation, due to questions regarding the accuracy of assertions by IBXS in press releases to investors and disclosure statements concerning, among other things, the company’s development of alternative forms of currency, and the company’s operation of a cryptocurrency platform.

Read this next

Uncategorized

Moscow Exchange reports $350 billion in November FX volumes

FX trading volumes continued its upward momentum at Moscow Exchange (MOEX) during November, buoyed by a steady rise in volatility coupled with a multi-year effort to bring new business to the platform.

Retail FX

Interactive Brokers’ volumes continue growth trajectory in November

Interactive Brokers LLC (NASDAQ:IBKR) has announced higher trading volumes in November, dwarfing the metrics for October and the same period last year by 20 percent.

Retail FX

Exness trading volume hits record highs for second consecutive ‎month

FX broker Exness’ trading volumes have breached new highs in November, building on the record-breaking turnover streak from the beginning of the fourth quarter. That has been aided by the economic impact from the Covid-19 developments and inflation concerns that apparently sent investors hunting for FX instruments to limit their risk exposure.

Institutional FX

Hedge-fund legend Steven Cohen invests in Dmitri Galinov’s 24 Exchange

24 Exchange, the OTC platform backed by Fastmatch founder Dmitri Galinov, has completed a fresh fundraising round of $14.25 million at an undisclosed valuation. The recent capital injection was led by Point72 Ventures, the venture capital firm of the hedge fund titan Steven Cohen.

Digital Assets

Can Coinbase make or break XRP? – (Congress, XRP rating, JP Morgan)

According to Coinbase’s Council, XRP has the highest rating among 28 cryptos – meaning it is the closest you can get to a security: 4 out of 5.

Digital Assets

Polygon (MATIC) delves deeper into blockchain gaming by partnering with GameOn

Polygon, the Layer 2 scaling solution for Ethereum, has announced a partnership with GameOn Entertainment to build new and different types of NFT games on the network as it seeks to expand into the blockchain gaming and NFT space in a major way.

Retail FX

David Beckham to promote GemForex across Asia

GemForex makes efforts to lead in trading conditions, execution times, safety of client funds and data security, according to the FX and CFD broker holding a Mauritius Financial License.

Retail FX

InstaForex extends sponsorship deal with Borussia Dortmund after German Cup win

InstaForex provides access to trading of forex, CFDs, stocks, futures, options, and cryptocurrencies as the FX industry goes multi asset to address the needs of an increasingly demanding client base. 

Digital Assets

Treasury Secretary Yellen still cant decide on digital dollar

Treasury Secretary of the US, Janet Yellen, has said that she still is not sure whether the US should go ahead and have the digital dollar and follow the example of other major countries including China and India in introducing the same.

<