US regulators have subpoenaed a lot of companies that are possibly breaching securities legislation, in a massive clampdown on fraudulent ICOs, said a source closely familiar with the issue. It has been worrying the Securities and Exchange Commission for several months that certain ICOs are attracting funds for non-existing projects.
Many companies and individuals running particular offerings were subpoenaed as they could be acting unlawfully, said the source who preferred to stay anonymous as these are not public investigations. ICOs imply that a firm offers digital tokens, which subsequently can be exchanged for products or services.
The boom in the market has been reflected in around $8.7 bln raised, as shows data by CoinDesk that monitors the ICOs. The agency believes that often small investors don’t pay much attention to assessment of risks.
Jay Clayton, chairman of the Securities and Exchange Commission has insisted many times that the bulk of ICOs need to register with the agency. The reason is that the Commission regulates securities traded on secondary markets, the process for coins is the same.
However ICOs have been unwilling to let themselves fall under the supervision of the agency. Back in January, Jay Clayton warned he’d sanction more companies in case they don’t reconsider their approach.