SEC Tells ICOs: You’re Forgiven If You Cooperate and Pay the Fine
The SEC is apparently going easy on ICOs who are cooperating, paying a fine, and returning the raised money to investors.
A Litany of Settlements
The US Securities and Exchange Commission (SEC) is reaching settlements with cryptocurrency Initial Coin Offering (ICO) projects that accept the Commission’s ruling on violating securities regulations.
Fortune reports that the SEC has reached settlement deals with some ICO projects in the U.S. for offering tokens deemed to be securities by the Commission. According to the report, some projects even got off lightly, without having to pay a fine.
Speaking to Fortune, Victor Santos of Airfox, one of the ICO projects fined by the SEC opined:
What we’re hoping for is by us being compliant, we’ll be ready when new regulation comes out.
As previously reported by Bitcoinist, the SEC fined Airfox about $250,000 and instructed the company to return investor funds with interest. The Commission also advised the company to follow the due process of carrying out a securities offering to the public.
Airfox is one of many projects to run afoul of the SEC as soon as the Commission began shinning the spotlight on the ICO arena in 2017. Apart from CEOs, public figures who promote ICOs have also had run-ins with the securities regulator.
Back in November 2018, the SEC fined DJ Khaled and Floyd Mayweather a total of $800,000 plus a ban on engaging in promotional activities for two-three years. Both celebrities had been involved in the promotional campaign for the Centra Tech ICO scam.
SEC Defiant on ICOs Being Securities
Meanwhile, there are calls within the U.S. for a more nuanced approach to cryptocurrency regulation beyond the scope of existing rules and codes.
SEC Chairman, Jay Clayton, has consistently maintained that the Commission sees most ICOs as securities even if the principal agents say their tokens are utilities. Some commentators believe that the SEC needs to revamp its laws to account for the unique nature of blockchain-based assets.
It seems a common belief that digital assets can only fit a single category under US law–in other words, that they can be commodities OR securities OR property OR money OR speech, but not more than one.
That's wrong. Digital assets can be, and likely are, many of these at once.
— Jake Chervinsky (@jchervinsky) March 25, 2019
The Commission’s categorization of many ICO tokens as securities remains a primary sticking point for some stakeholders. Many believe that the Howey Test isn’t sufficient to classify the many forms of blockchain tokens which can fall under utility, payment, and asset tokens to mention a few.
Meanwhile, ICO token sales are the midst of a significant decline as fundraising figures continue to plummet. As reported by Bitcoinist, tokens sales are currently down by 90 percent when compared to Q1 2018.
Should the securities watchdog create different regulations for ICOs? Share your thoughts with us in the comments below!
Image via Twitter (@jchervinsky), Shutterstock