ICOs face ‘day of reckoning,’ CBOE president says
Does the U.S. Securities and Exchange Commission (SEC) have something brewing behind closed doors? Two days ago, it was reported that John McAfee would no longer be available to promote any initial coin offerings (ICOs). McAfee announced via Twitter that he had received threats from the SEC regarding his promotion, and ominously stated that “those doing ICOs can all look forward to arrest.” Now, CBOE President Chris Concannon is saying virtually the same thing.
According to Business Insider, Concannon has said that there will be a major “reckoning” soon in the ICO market, which will be composed of two phases. The first phase involves around the SEC’s decision to classify ICOs as unregistered securities, effectively rendering investor holdings useless. As a result, the second phase, a series of class-action lawsuits, will follow against the companies holding the funding events.
Concannon asserts that the impending action should make ICO investors very nervous, and that they “should lay awake at night” stressing over the uncertainty of the ICO market. He added that a company offering an unregistered coin is offering an unregistered security, which would make that entity an illegal “unregistered underwriter.”
“If you sold someone an unregistered security you are liable to them if they decide to take them to court,” Concannon explained.
According to his take on things, the outcome of any SEC decision may not be completely bleak. Robert Hockett, a professor of financial regulation at Cornell University, said that he doesn’t believe the SEC would retroactively target previous projects. He said, “I don’t think it is the case that people involved in the business are going to be prosecuted against as if they have been violating the law. But there is a little bit of a room for exception with something particularly egregious.”
Federal regulators such as the SEC and the Commodity Futures Trading Commission (CFTC) have repeatedly said that investors and companies need to ensure that they operate in compliance with existing laws. Those companies that haven’t done so have found themselves facing the wrath of the organizations, leading to both jail time and asset seizures. There are reportedly now 70 active investigations across 40 Canadian and U.S. jurisdictions that are targeting ICOs under what is being called “Operation Cryptosweep.”
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