The statement provides considerations for main street investors and market professionals; investors should be aware of the risks of these types of investments which have less investor protections compared to the traditional securities market; to date no coin offerings have been registered by the SEC; the statement notes, “A change in the structure of a securities offering does not change the fundamental point that when a security is being offered, our securities laws must be followed.” Source
The Reality Shares Nasdaq Blockchain Economy Index looks to provide an ETF that tracks the growth and development of companies implementing blockchain solutions; they filed for the ETF with the SEC on November 2nd; “The collaboration between Nasdaq and Reality Shares represents a tangible way to track the growth of an industry that may revolutionize the way commerce is conducted, and yet is still in its infancy,” said Fredrik Voss, Vice President of Blockchain Innovation at Nasdaq. Source.
Its platform focused on funding from fans for internet celebrities on YouTube, Twitch and other live streaming platforms; in August it raised 119.5 ether which is about $47,000; the SEC notified Protostarr of its investigation however a final status has not been reported; the firm says forming a legal department to manage the ICO investigation and potential need for registration is not within its short-term plans and it will refund its ICO investors. Source
The SEC's Office of Investor Education and Advocacy has issued an alert to investors, warning them about potential scams with companies claiming to be involved with ICOs; according to the report, fraudsters may use new technology such as ICOs to defraud customers in various ways; discusses recent trading suspensions, pump-and-dump, market manipulations and tips for investors. Source
The trading suspension was announced for American Security Resources Corp. (ARSC) on August 24, 2017; the suspension will be effective until September 8, 2017; according to the SEC, "The Commission temporarily suspended trading in the securities of ARSC because of questions that have arisen regarding publicly available information about the company in press releases on OTCMarkets.com, dated August 1, and August 8, 2017, concerning, among other things, the company's business transition to the cryptocurrency markets and early adoption of blockchain technology."; the SEC has suspended trading on at least two other companies involved in bitcoin that are listed on the OTC markets. Source
The new unit at the SEC was started in September to focus on potential illegal activities in the digital currency market; the ICO that was shut down promised returns of 1,000 percent; the SEC filed charges against Dominic Lacroix who they claim was trying to raise $15mn from thousands of investors. Source.
Jay Clayton's statements suggest that firms using ICOs may need to register them with the SEC; he stated in a speech on Wednesday, "I have yet to see an ICO that doesn’t have a sufficient number of hallmarks of a security."; there have been more than 160 ICOs to date which have raised over $3 billion. Source
Podcast talks with former SEC Enforcement Division attorney Nick Morgan; Nick Morgan says the SEC is reviewing all types of cases and using the Howey Test to determine whether the deals are considered an offering of securities; explains that the Howey Test considers whether the expectation of profit relies on efforts of investors and also says that the investigations center around whether the investors are passively investing or actively involved in creating value; Morgan also noted that the SEC's resources are limited given the vast number of ICOs being offered and reports that the investigations will likely focus first on any fraudulent activity with potential investigation efforts also on exchanges that encompass the inclusion of many ICOs. Source
Chinese fintech company QuantGroup has filed an IPO application with the SEC, planning to raise $200 million from IPO; QuantGroup will start evaluating the needs of potential investors in as early as September; JPMorgan Chase & Co and Morgan Stanley are working as the financial advisors for this IPO. Source (Chinese)
The SEC's report on ICOs as securities has prompted ShapeShift to review the listings on its cryptocurrency exchange; ShapeShift will likely delist some of its traded listings and says it does not want to be characterized as a securities exchange; ShapeShift and its legal counsel will apply the Howey Test to the cryptocurrency listings which is the current market standard also used by the SEC for determining whether an offering is considered a security. Source