It appears crypto still has everyone on edge. While many enthusiasts and loyalists continue to litter the industry and bring an air of positivity to the crypto space, others show massive concern and seek to regulate its every move.
What’s the SEC Up To?
A new report suggests that the Securities and Exchange Commission’s (SEC’s) top priority is to thwart digital currency scams. Interestingly, these issues warranted little to no attention roughly two years ago, though it appears they’ve become so common that the organization is seeking to ensure customer safety above anything.
Particularly, the SEC says it’s aiming to take down any initial coin offerings (ICOs) it believes may not be following the rules. The report regards ICOs as “high-risk investments,” as many “lack viable products or established track records.” The document also says that many contain shady business models or are unable to safeguard digital assets from theft by hackers, while others are completely fraudulent and operate under the guise of garnering business capital.
How Does It All Work?
New details have emerged over the past year suggesting that investors have lost roughly half-a-million of their hard-earned cash to phony ICOs. Many work by offering investors access to new coins in exchange for funds. The investors then use these coins to get their fingers on goods and services offered by the companies in question.
While several are either complete or in fruition, several other ICOs have proven fraudulent, and disappear six months in with millions of dollars in their hands from investors that didn’t know any better. As a result, the funders are ultimately left with empty wallets and coins they can’t use.
Taking Matters Seriously
In a section of the report titled “ICOs and Digital Assets,” the SEC mentions:
In the past year, the [enforcement] division has opened dozens of investigations involving ICOs and digital assets, many of which were ongoing at the close of FY of 2018.
Actions against phony ICOs are headed by the organization’s Cyber Unit, which became fully operational this year. This year alone, the division has instigated roughly 20 stand-alone cases, 12 of which are against ICOs. The agency has also commented that while fraud is a major problem, it will also be focusing on ICOs and other ventures that don’t seek to comply with the SEC’s present regulations.
It’s Not All Bad…
Despite some growing fears, the SEC did acknowledge that blockchain and cryptocurrencies have many virtues, and can serve as positive influences on America’s economy:
The enforcement division recognizes the need to balance its mission to protect investors from the risk posed by fraud and registration violations against the risk of stifling innovation and legitimate capital formation.
To view the full report, click here.
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