Feds shut down allegedly fraudulent cryptocurrency offering
The Securities and Exchange Commission on Monday announced that it was taking action against an initial coin offering (ICO) that the SEC alleges is fraudulent. The announcement represents the first enforcement action by the SEC's recently created cyber fraud unit.
In recent months, the SEC has been wrestling with what to do about ICOs. US securities laws impose a number of requirements on anyone who offers new investments to the public. ICOs—in which a company offers the public cryptocurrencies that could appreciate in value the way Bitcoin has—look a lot like securities offerings. But most ICOs have ignored the SEC's requirements.
At the same time, the SEC is aware that new cryptocurrencies could become an important source of innovation. And some experts argue that many new cryptocurrencies—those that serve a useful function beyond their potential to grow in value over time—are not securities, legally speaking.