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SEC Launches Probe onto the Crypto-street

SEC Launches Probe onto the Crypto-street

March 2, 2018 8:03 am,

The Securities and Exchange Commission, that is the SEC,  has issued dozens of subpoenas and information requests to technology companies and advisers involved in the red-hot market for cryptocurrencies.

Certain sources told Wall Street Journal that the regulatory agency has a currently unknown number of subpoenas and information requests to advisers and technology companies active in the United States’ cryptocurrency market.

Among the subpoenas from the top US securities regulatory agency, there are demands regarding the structure for sales and pre-sales for ICOs, which do not fall under the same rigorous scrutiny of public offerings. The increased pressure follows previous inquiries from the SEC, which have suggested that many token sales and ICOs may be violating securities laws.

Since the last few months, the SEC has asked for information from companies that have sold new virtual currencies to raise money for their projects, as well as advisory firms and lawyers who have helped with these sales, according to four people who have seen some of the subpoenas. The people asked not to be identified because the subpoenas are part of confidential legal negotiations. The demands for information began last year, and companies have continued receiving them in recent months, the four people said.

Previously, SEC Chairman Jay Clayton issued a statement Jan. 25, along with U.S. Commodity Futures Trading Commission Chairman J. Christopher Giancarlo, that said, in part: “In recent months, we have seen a wide range of market participants, including retail investors, seeking to invest in [distributed ledger technology, or DLT] initiatives, including through cryptocurrencies and so-called ICOs — initial coin offerings. Experience tells us that while some market participants may make fortunes, the risks to all investors are high. Caution is merited.”

With this news, the price of bitcoin steadied on Thursday, as the market kept a close eye on developments about a reported probe by the Securities and Exchange Commission into the initial-coin offering (ICO) industry.

However, earlier, the price fell sharply late Wednesday on the news that the SEC had issued scores of subpoenas and information requests to companies involved in the ICO market.

We know what an ICO is, it is a fundraising method in which a company issues its own cryptocurrency, often in exchange for bitcoin. The SEC has had its eye on the industry for a while. In December, a new cyber unit halted an allegedly fraudulent ICO. And now this news.

Read the journal here: https://www.wsj.com/articles/sec-launches-cryptocurrency-probe-1519856266


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