The US Securities and Exchange Commission (SEC) has started investigations into dozens of startups operating in the cryptocurrency area, an agency official said on Thursday.
Stephanie Avakian, co-director of the SEC’s enforcement division, confirmed rumors that the agency was investigating a lot of of initial coin offering (ICO) operators and associated companies for violations of federal securities regulations.
Last year Avakian stated that ICOs were quickly becoming a priority for the SEC’s enforcement division, and the agency has made clear its intent to police the markets for this nascent fundraising mechanism.
Earlier this month the SEC had issued about 80 subpoenas to ICO operators and advisers, trying to investigate whether they had violated federal laws by holding unregistered securities offerings.
Overstock, whose subsidiary tZero is attempting to raise $250 million through an ICO, acknowledged that its token sale was under investigation, though CEO Patrick Byrne said that the company was voluntarily complying with the probe and had not received a subpoena. The company has also complained that the probe is threatening not only its ICO but also its core business as an e-commerce retailer.
The SEC is also studying cryptoasset hedge funds for conflicts of interest, as well as information on how fund managers are valuing assets in their portfolios.
The SEC has also warned cryptocurrency exchanges that it is unlawful for them to list security tokens without registering with the agency as a securities trading platform — a significant statement, given the SEC’s broad interpretation of what tokens constitute securities.