SEC report shows strict action against ICO fraud

05 Nov, 2018
by Joeri Cant
SEC report shows strict action against ICO fraud

The US Securities and Exchange Commission has published their second anual report where they describe the actions they took against fraudulent ICOs in 2018’s fiscal year.

The report offers insight into the ICO-related fraud and shows enforcement-related accomplishments for the 2018’s fiscal year, which ended on September 30.

Stephanie Avakian, Co-Director of the Division of Enforcement at the SEC, said that they continue that practice with this report.

'The report presents and assesses the division’s work during Fiscal Year 2018, highlights some of its more significant accomplishments, and discusses key initiatives. We believe that the Division’s work this year was a great success', she said.

'We believe our approach to enforcement in this space has been thoughtful and consistent. Importantly, it has provided a template for authorities in other countries, where fraud and misconduct targeting U.S. investors often have been based'

The report sees ICOs as high-risk investments, as many are unable to protect digital assets from hackers, contain shady business models, and end up being completely fraudulent.

During 2018's fiscal year, the organization brought forth 20 standalone cases related to financial fraud, 12 of which had to do with ICOs and digital assets. The SEC states that it had roughly 225 cyber-related investigations occurring at once.

Representatives of the SEC do not wish to stifle innovation in the financial space, however, they are convinced they have to keep up their hard work to educate investors regarding which fundraising efforts may or may not be legitimate.

The SEC will continue to recommended enforcement actions against firms looking to engage in an unlicensed broker-dealer activity or violate registration protocols.

The report further points out the significant priority to reimburse retail investors who have been cheated by fraudulent ICOs.

Consistent with that goal, a substantial amount of money was returned to harmed investors in FY 2018.

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