Startups Shelve ICOs Plans After Getting Calls From US Regulator

The US SEC Calls ICOs Startup to Close Operations and Refund

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  • US regulator cools a red-hot crypto market by picking up the telephone.
  • A phone call from US SEC pressures ICO startup to close operations and refund.
  • Firms realized ICOs might violate securities laws.

United States: After the Wall Street’s main regulator has issued warning repeatedly that the hot new market for Initial Coin Offerings (ICOs) is probably full of fraud. The US regulator have taken a broad step by developing an old-fashioned way to slow down the ICOs rage: picking up the telephone.

According to Robert Cohen, the head of the SEC’s cyber enforcement unit, on Friday a minimum of 12 cryptocurrency-linked firms have shelved plans to raise money through ICOs from investors after officials from the US Securities and Exchange Commission (SEC) called them up. Robert stated at a conference in Washington that the scrutiny from SEC has prompted ICOs firms to realize that their offerings may have violated federal securities laws.

Since last year, regulators have been sounding the warning against ICOs, with Jay Clayton, the US SEC Chairman warning that crooks could be employing the latest technology frenzy to pull off a scam that’s as old as markets themselves: talking up an asset and then selling once the dumb money pours in.

In ICOs, a firm sells digital tokens that can eventually be redeemed for goods and services. The tokens can be traded in a secondary market – which the US SEC stated make them securities and subject to its oversight. Due to this, the SEC officials stated that many ICOs should register with the agency.

However, despite the warnings from the agency, ICOs continue to attract lots of money. And this year alone, ICOs have raised about $1.2 billion, after raising an estimated amount of $3.7 billion in 2017.

A blog post from a blockchain-based organization called Protostarr revealed that the firm had a recent phone call from the US regulator and had to shut down its token sale operations afterwards due to the call. Furthermore, Protostarr plans to refund its investors by sending the ethereum funds raised back to the original addresses.

Protostarr would be the first ICOs startup to shut down operation due to the US regulator’s concerns with this form of investment.

What do you think about the move of US regulator on ICOs? Let us know in the comments below.

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