SEC recent enforcement actions against ICOs amidst bearish Crypto Market

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Last Friday (November 16th), the US Securities and Exchange Commission (SEC) has issued new guidelines for Initial Coin Offerings (ICOs) and exchanges facilitating the trading of security tokens.

Increasingly, the SEC has been taking a stricter stance towards ICOs and digital assets. The regulatory agency has recently taken dozens of enforcement actions against digital assets and ICOs involving AirFox, Paragon and EtherDelta.

In the latest released report, SEC has stated that “When warranted, the Division has recommended enforcement actions to the Commission 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. While many of these cases have involved allegations of fraud, the Division also has pursued enforcement actions to ensure compliance with the registration requirements of the federal securities laws. 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”.

On November 15th 2018, the SEC announced that it had settled charges against Zachary Coburn, the founder of EtherDelta, a decentralized crypto trading platform. EtherDelta was charged on the grounds of operating as an unregistered national securities exchange. This incident signals that decentralized exchanges are not exempt from the radar of regulators.

In conclusion, SEC is slowly starting to provide and enforce guidelines which have sparked a flurry of debates. Perhaps, SEC’s recent enforcement activity played a role in the massive sell-off in the crypto-markets with Bitcoin (BTC) falling below USD5,600 for the first time in 2018. Some of the top 20 cryptocurrencies also dipped by as much as 20%.

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