Cryptocurrencies: How Sec’S Paragon Ruling Could Post Many Crypto Icos To Bankruptcy

Following upwards on yesterday's "Statement on Digital Asset Securities Issuance as well as Trading—U.S. Securities as well as Exchange Commission".

From CryptoCurrencyNews:

The recent crackdown on 2 initial money offerings (ICOs) Paragon as well as AirFox past times the U.S. Securities as well as Exchange Commission (SEC) could Pb to many blockchain as well as crypto projects declaring bankruptcy inward the coming months.

As CCN reported on Nov 16, Paragon as well as AirFox were ordered to pay a $350,000 fine to the U.S. SEC as well as refund investors who participated inward the token sale.

The work for the 2 tokens is that they get got been asked past times the the States SEC to refund $12 ane chiliad m as well as $15 ane chiliad m respectively to investors, as well as since their ICOs, the prices of cryptocurrencies including Bitcoin as well as Ethereum get got declined substantially as well as blockchain projects get got used close of their funds garnered inward the token sales to fund operations.

“Both companies get got agreed to provide funds to harmed investors, register the tokens equally securities, file periodic reports amongst the Commission, as well as pay penalties,” the official SEC document read.

Bigger Issue
H5N1 to a greater extent than serious final result for ICOs is that equally the SEC reaffirmed inward its document, investors inward ICOs considered securities nether the existing guideline of the SEC get got the correct to sue projects to hold out compensated for their losses.

As such, if an investor invested inward a token as well as recorded an lxxx percentage loss, for instance, the investor isi technically elligible to file a lawsuit against the initiator of the token sale to have the funds back.

“On a engagement no afterward than 60 (60) calendar days… distribute past times electronic agency reasonably designed to notify each potential claimant,  notice as well as a claim form, both of which shall hold out inward a cast non objected to past times Commission staff, informing all persons as well as entities that purchased PRG potential claims nether Section 12 (a) of the Securities Act, including the correct to sue “to recover the consideration paid for such safety amongst involvement thereon, less the total of whatever income received thereon, upon the tender of such security, or for damages if [the purchaser] no longer owns the security.”

Upon the crackdown on Paragon as well as AirFox, Stephanie Avakian, the co-director of the SEC’s Enforcement Division heavily emphasized that the SEC volition proceed to investigate token sales that get got violated federal safety laws amongst the intent of bringing downwards ICOs considered equally securities past times the SEC.

“We get got made it clear that companies that final result securities through ICOs are required to comply amongst existing statutes as well as rules governing the registration of securities. These cases tell those who are considering taking like actions that nosotros proceed to hold out on the ticker for violations of the federal securities laws amongst observe to digital assets.”

US Ecosystem Should hold out Avoided
In the the States at least, tokens as well as ICOs get got 2 choices: either completely block out investors from the the States participating inward ICOs or cooperate amongst the SEC to distribute tokens equally a registered security....MORE

Not that ICOs demand the SEC's assist to larn to zero. Also at CCN:

Crisis: After $30 Billion Invested, Most Crypto ICOs Have Nothing to Show