SEC escalates enforcement of digital currency offerings
The Securities and Exchange Commission escalated its crackdown on initial coin offerings on Friday, announcing two new settlements with companies that created their own cryptocurrencies to raise money.
CarrierEQ Inc. and Paragon Coin Inc. both agreed to refund customers who bought their currencies, register their tokens as securities, and each pay $250,000 in fines to the commission for violating securities law by failing to register their currency offerings. They’re the second and third cryptocurrency companies to reach agreements with the capital markets regulatory agency over unregistered investment offerings. While ICOs exploded last year, raising billions, few companies registered their digital tokens as securities — meaning they would have to follow the same disclosures as a stock offering — despite warnings from the SEC.
According to the SEC, Airfox raised approximately $15 million from digital assets to develop a mobile app that would allow customers to earn digital tokens by interacting with online advertisements, while Paragon aimed to use funds raised from their digital asset sale to build a cannabis blockchain. Under terms of the settlement neither company admitted or denied wrongdoing.
“We have made it clear that companies that issue securities through ICOs are required to comply with existing statutes and rules governing the registration of securities,” Stephanie Avakian, co-director of the SEC’s enforcement division, in a release touting the settlements. “These cases tell those who are considering taking similar actions that we continue to be on the lookout for violations of the federal securities laws with respect to digital assets.”
Article author : by Colin Wilhelm
Article source name : Wshingtonexaminer
Source URL : https://www.washingtonexaminer.com/policy/economy/sec-escalates-enforcement-of-digital-currency-offerings