In what could be its most aggressive move to crack down on fraud in the crypto space, the U.S. SEC has reportedly issued scores of subpoenas to people who’ve held, or who are planning on holding, ICOs.
When the U.S. Securities and Exchange Commission’s chairman said last month that the agency was monitoring the crypto space, he left out the part about scores of subpoenas and information requests being prepped to be sent to dozens of ICO players.
News of the subpoenas came yesterday from a story published by the Wall Street Journal. The idea that scores of legal papers were sent to those behind the ICOs was enough to freak out many in the crypto space. Bitcoin fell about two percent, but then recovered to $10,409, at the time of writing Wednesday night.
The Wall Street Journal reported Wednesday evening (New York time) that it had been tipped off about the subpoenas by an unidentified people familiar with the matter.
Writing on the wall
If this seemingly massive SEC probe is underway, it would be the largest ever probe of its kind to hit the crypto space by the commission. The SEC has shuttered ICOs after finding they were fraudulent, but if they have indeed issued scores of subpoenas, it would be unprecedented.
When you review the statements made, and actions already taken, by the SEC concerning ICOs, you can probably see that the commission was readying to take some kind of action. For example, last month the SEC’s Office of Compliance Inspections and Examinations (OCIE) announced its 2018 examination priorities, and at the top of the list were cryptocurrencies and initial coin offerings.
We told you in October of last year about the SEC ramping up its efforts to protect investors from fraudulent ICOs. The SEC’s chairman Jay Clayton said at the time that the ICO space was a ripe area for pump-and-dump schemes. The reason stems from technology and the electronic means by which scammers can avoid being caught. The anonymity at the heart of the cryptocurrency space and ICOs make it harder to catch the bad actors.