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The U.S. Securities and Exchange Commission (SEC) has issued a warning about companies making Initial Coin Offering (ICO) claims. It warns of schemes including pump-and-dump and market manipulation as well as points out how companies may use ICOs to boost their stock prices. The warning follows the trading suspension of four companies’ shares by the Commission.
SEC Suspends Trading of Bitcoin Firm’s Shares After 7000% Price Jump
The SEC’s Office of Investor Education and Advocacy on Monday
a warning to investors “about potential scams involving stock of companies claiming to be related to, or asserting they are engaging in, Initial Coin Offerings (or ICOs).” The Commission wrote:
These frauds include ‘pump-and-dump’ and market manipulation schemes involving publicly traded companies that claim to provide exposure to these new technologies.
“There may be situations in which companies are publicly announcing ICO or coin/token related events to affect the price of the company’s common stock,” the SEC detailed. Therefore, the trading of such stocks may be suspended “to protect investors and the public interest,” the agency added.
Some circumstances that could lead to the suspension of trading include a lack of current, accurate, and adequate information about the company. In addition, questions about the accuracy of publicly available information as well as insider trading and potential market manipulation can also lead to trading suspensions.
The SEC also revealed on Monday that it has recently suspended the trading of four companies’ shares for making “claims regarding their investments in ICOs or touted coin/token related news.” The four companies are First Bitcoin Capital Corp., Ciao Group, Strategic Global, and Sunshine Capital.
on the suspension of First Bitcoin Capital Corp’s shares after they rose almost 7000%. In July, the company
that its subsidiary Coinqx Exchange Ltd acquired tokens called “the Internet of Money” which would eventually trade under the symbol XOM. The company says that it would allow a buyback at a set rate of 2 shares for 1 XOM token.
the trading of the company’s shares on OTC Markets from August 10 to 23. The shares still have not resumed trading at press time.
Strategic Global Investments revealed in July that it
to sponsor over 60 Counterparty cryptocurrencies which it claims are fully SEC compliant. The first one will be the tokenized asset
the trading of the company’s shares from August 4 to 17, and the U.S. Financial Industry Regulatory Authority (FINRA) also independently requested some information from the company. Its shares have not resumed trading at press time.
from trading from April 12 to 26, from trading from April 12 to 26 Dibcoin Sec , namely Dibcoins.” A few days after the suspension, the company was
into a private one. Its shares have not resumed trading at press time.
in a report that Dao tokens are securities and ICOs are subject to federal securities laws. However, soon afterward, 20 new ICOs were reportedly
Nonetheless, the SEC’s warnings were not ignored. A number of cryptocurrency exchanges responded by reviewing their listings and policies. Bitfinex, for example,
its exit from the U.S. Market, citing the strict regulatory environment. “Bitfinex is taking the proactive step of barring U.S. customers from trading certain digital tokens that may be deemed securities in the eyes of the SEC,” the exchange noted.
that “in light of the SEC’s statements, we will need to adapt our service offering to ensure it’s not mischaracterized as a ‘securities exchange’, adding that “we may need to delist some types of tokens from the platform.” Poloniex
by stating that “as part of our compliance processes, we periodically assess listed tokens, and some may end up delisted as a result.”
What do you think of the SEC’s warnings and the suspensions? Let us know in the comments section below.
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A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.
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