Dozens of Cryptocurrency Companies Have Abandoned Their ICO Plans After Receiving SEC Phone Call
Well, counter-intuitive as it may seem, the agency is actually showing a preference for the good old telephone over other state-of-the-art technologies to ward off shady ICOs. Before we delve into the details, let’s first take a step back and revisit the fact that the Wall Street’s main regulator has issued multiple warnings time and again urging crypto enthusiasts to steer clear of legally sketchy ICOs no matter how compelling the propositions seem.
Jay Clayton, Chairperson at the SEC, even went as far as saying that crooks were busy harnessing blockchain and the ever-expanding crypto market to pull off serious scams that are as old as the market itself is. That is, to project an asset as the “next best thing” and then selling it once a good amount of “dumb money” pours in.
So how does the SEC use the telephone to deter the bad guys in the fast-growing realm of ICOs?
Apparently, the modus operandi is pretty simple. The folks over at SEC just pick up the telephone and call up the people behind individual ICOs. And believe it or not, the strategy has paid off. According to a key SEC official, over a dozen of cryptocurrency-related companies have abandoned their plans to raise fund from investors after they were contacted by the agency over the telephone.
The revelation came from none other than Robert Cohen, the head of the SEC’s cyber enforcement unit. It looks like the firms that were contacted got the hunch that their offerings were in violation of SEC’s regulatory framework one way or the other.
For the uninitiated, an ICO is an initial offering that enables crypto/blockchain companies to sell digital tokens that can eventually be redeemed as services and goods. Because it is possible to trade these tokens in a secondary market, SEC views them as securities and deploys appropriate mechanisms to oversee their functioning. This is why SEC is convinced that a huge chunk of all the ICOs out there should sign up with the agency for legal reasons.
Interestingly, despite the SEC’s repeated warnings to investors, ICOs are thriving even today – financially, as well as regarding future prospects. According to one estimate, ICOs have already raised nearly $1.2 billion in the first two months of 2018, compared to the $3.7 billion made in 2017.
Former SEC Commissioner Dan Gallagher echoed the suspicion by the agency in a recent panel discussion where the serving SEC Chairperson was also present.
“It’s Wolf of Wall Street on steroids,” said Gallagher, while discussing shady ICOs hell-bent on ripping off unsuspecting people.