SEC Crackdown on Fraudulent Crypto Firms Could Not Recover Investor Money

By Prashant Jha

SEC has maintained its hardline approach towards the ICOs and Digital Asset throughout 2018. According to a recent report SEC regulators have brought in 90 stand-alone enforcement actions related to ICOs and fraudulent crypto firms.

SEC has always been called out and blamed for its tough stand against the digital assets and looking at the enforcement actions, it’s not really hard to understand why people are not a big fan. In the last two years itself, SEC has charged 70% of the total red flagged industries.

However, the crackdown has failed to recover the losses incurred by investors. In the last two years of its crackdown spree, SEC has managed to recover a mere $36 Million. To give you a perspective, the number of Red Flagged ICOs and Firms have accumulated a total of over $1 Billion.

SEC’s Never Ending Beef Against Digital Assets

In 2015 when the cryptocurrencies were a fairly new entity to the world and looking to spread its reach in the USA, SEC became its biggest hurdle. It made it compulsory for new and upcoming ICOs and crypto firms to get a Bitlicense, which almost killed the ICOs before it can make an impact on the market. That decision resulted in many new and upcoming forms to shift their base from New York towards Europe.

SEC has warned that it may have to put certain digital tokens under the security category depending on the characteristics. SEC Chairman Jay Clayton has made it clear that upcoming ICOs and digital tokens need to communicate with authorities to check whether they qualify as a digital asset or just another security. The firms with a right set of approach and plans can get necessary exemptions as well.

The approach seems to have gotten tougher in 2018, as the SEC’s annual enforcement report shows a marked increase of investigations into ICOs, with 30 mentions this year relative to only four in 2017.

However, increased intensity of crackdowns has not resulted in getting the money back to harmed investors.

What is the Future of ICOs and Digital Assets Amid SEC Crackdown?

2018 was being seen as a breakthrough year for blockchain technology, where the majority of the world is trying to find a mid-way between the regulators and Digital Assets. However, SEC seems to have other plans, as the clampdown continues amid the race to establish a well-regulated venue for tokens deemed to be securities.

SEC has failed on its part to establish a certain set of criteria, rules, and regulations which would define the role and working of ICOs and crypto tokens. If they would not put together their act, USA might miss out the Blockchain revolution bandwagon.