Skip to main content

Companies, lawyers probed for selling cryptocurrency initial coin offerings

The Securities and Exchange Commission (SEC) is now investigating companies and individuals for possibly violating securities laws through initial coin offerings (ICO), or token sales, of cryptocurrency. The SEC reportedly issued “dozens” of subpoenas and information requests to determine how sales and pre-sales of ICOs work given they don’t follow the same rules that regulate initial public offerings (IPOs) to protect investors. 

An IPO, or Initial Public Offering, is when a privately held company goes public with its stock. Companies take this route to become publicly traded on the stock market, or to generate funds to expand their footprint. Meanwhile, companies use an ICO to raise funds for a new cryptocurrency business or platform. Investors use legal tender or digital coins to purchase a percentage of the new cryptocurrency in return for digital tokens, financially fueling the platform. 

Yet it’s the procedure ICOs use that may be generating government involvement. It’s similar to how developers raise money to create games by selling an “early access” token on digital platforms, like Steam, to fund the project. ICOs are listed as “software presale tokens,” and use descriptors such as “crowdsale” or “donation” instead of the ICO term to escape federal regulation. 

But the SEC is catching on, and is now grilling companies that sold digital coins to raise funds, and the lawyers and advisory firms that help with sales. The SEC began demanding information last year, and then rolled out around 80 subpoenas over the last three months to companies and what the SEC calls gatekeepers: individuals who help the sale of ICOs. 

According to the SEC, virtual currencies should be listed as securities and registered with regulators. Jay Clayton, chairman of the SEC, believes many “promoters” of ICOs and cryptocurrencies simply aren’t complying with securities laws. He asked the agency in January to change that. 

“Market professionals, especially gatekeepers, need to act responsibly and hold themselves to high standards,” Clayton said. “To be blunt, from what I have seen recently, particularly in the initial coin offering space, they can do better.” 

The subpoenas request information about sold cryptocurrencies, how companies market token sales, and the identities of individuals who purchased those tokens. The subpoenas were distributed across multiple cities including Boston, New York, and San Francisco. Unnamed sources who viewed the subpoenas didn’t indicate if an additional wave of subpoenas is on the way to digital coin investors. 

“Generally, subpoenas are the guided missiles of SEC enforcement actions,” says Aaron Kaplan, a securities attorney and co-founder of Prometheum. “There’s going to be a big reckoning for those who have operated outside the federal securities laws, with more SEC enforcement actions and criminal prosecutions in the near future.” 

Online retailer Overstock took a nosedive on the stock market Thursday after disclosing in a regulatory filing that it’s currently under investigation by the SEC over its cryptocurrency exchange subsidiary tZero. The company raised $100 million from its ICO alone, and another $150 million to expand its blockchain-based trading system. Overstock must now provide documents related to the ICO and its tokens. 

Editors' Recommendations

Kevin Parrish
Former Digital Trends Contributor
Kevin started taking PCs apart in the 90s when Quake was on the way and his PC lacked the required components. Since then…
Best Surface Laptop and Surface Pro deals: From $450
Microsoft Surface Go 3 sitting on table.

If you want a thin and light laptop that's similar to the MacBook Air but not in the Apple ecosystem, then the Microsoft Surface lineup of laptops is absolutely the way to go. In fact, if you've seen the recent unwrapping of the business version of the Surface Pro 10 and Surface Laptop 6, you might be fired up and ready to grab your own surface. Unfortunately, the Surface lineup can be quite expensive, which is why we've gone out and scoured the retailers for the best deals we could find and collected them below. So, be sure to check out everything, as well as some of these other great laptop deals if you aren't fully committed to the Microsoft Surface lineup.
Microsoft Surface Go 3 -- $450, was $550

Functioning as a 2-in-1 laptop that can switch between tablet mode and laptop mode, the Microsoft Surface Go 3 won't have trouble dealing with basic tasks as it's equipped with the Intel Pentium Gold 6500Y processor and 8GB of RAM. The 10.5-inch touchscreen with 1920 x 1080 resolution is bright and colorful, and its 128GB SSD is more than enough for your documents. The Microsoft Surface Go 3 ships with Windows 11 Home in Mode, so you can start using it as soon as you unbox it. The device also promises up to 11 hours of battery life before requiring a recharge.

Read more
Best GPU deals: MSI, XFX, EVGA
An AMD graphics card in an external GPU enclosure.

If you're building a new PC from scratch, or upgrading an old one, then a new GPU is probably one of the biggest upgrades you can make, at least if you're looking for great gaming performance. Unfortunately, the last generation of RTX 40-series cards really amped the prices up, and even if you're going for AMD, you're going to be paying a pretty penny to get your hands on a good GPU. That said, there are some good deals to be had; whether you want something budget-friendly or high-end, you can always put that extra money you save into more RAM or a better CPU. Also, be sure to check out some of these gaming PC deals if you'd rather just grab something already pre-built.
MSI AMD Radeon RX 6500 XT Mech 2X 4GB GDDR6 -- $175, was $190

If you're looking for something that is ultra-budget, then this RX 6500 XT is a good option in the lower range and should let you handle at least some of the main free-to-play games like CS:GO and Rocket League, although you will have to play with graphical compromises. It should also handle indie and casual games, especially older ones like the ones you might find on emulators, so it's also a good option for that sort of budget build. the 4GB of VRAM is not a lot, but again, if you're not planning to play any modern AAA or AA games, then this isn't a bad option.

Read more
Horizon Forbidden West is a marvel — if your PC can handle the heat
Aloy shooting a bow in Horizon Forbidden West.

More than two years after its release on PS5, Horizon Forbidden West is now available on PC. The original game, Horizon Zero Dawn, has become a mainstay for performance testing on PC, and it's one of the pillars of our GPU reviews. The sequel ups the ante in a big way with more graphics options and a more demanding world overall.

I've been playing the game over the past week, drilling down on the best settings, comparing DLSS, FSR, and XeSS, and testing the bounds of performance. Horizon Forbidden West lives up to the standard set by the original release, though weaker GPUs with only 8GB of memory will struggle with high graphics settings and resolutions.
Best settings for Horizon Forbidden West PC

Read more