SEC Continues Taking Aim at Non-Compliance: December 2018 Edition
The latest SEC crackdown in a recent string of company and celebrity takedowns has provided yet another reminder that the SEC does not play around.
2018 as a whole was rather light on tokenized platform launches following the fallout from the ICO Mania of 2017. Some even herald 2018 as the “year of the security token” based upon the sentiment change following the brutal justice that the SEC has brought down on some large long-time cryptocurrency incumbents and pioneers.
On this latest crackdown, the story goes that the company CoinAlpha formed a fund in October 2017 with the goal of investing in digital assets. Acquiring a few investors, the firm raised over $600,000. The company had filed — but had not received — an exemption when they decided to do go about and fundraise anyway.
What transpired was what anyone might have anticipated: the SEC took action. They forced the fund to return the money and doled out a $50,000 fine to the firm. The reasons that were presented were that the firm effectively solicited securities investors in breach of law, as well as initially failing to ensure that the investors were accredited. In this instance, the firm was able to settle, allowing a truce with the SEC with the stipulation that the fine is paid and that the Securities Act isn’t violated in the future.
What we seem to be seeing, more often than not, with a lot of the SEC’s activity is a very calculated strategy toward custom-fitting the technology for the law. No longer are we at the point where the SEC remains naive to the innerworkings of the cryptocurrency harbingers or the enterprise blockchain ecosystem. The SEC is showing their cards as very open, but very strict in determining what we need for a functional, compliant ecosystem. Recently, the SEC opened their FinTech Hub as way for potential and current startups, as well as other intrigued parties, to open the dialogue with the commission over the legal viability of their platform. Moreover, the SEC has spoken on a number of occasions directly to the public in a very Q&A format about pertinent topics.
All in all, there is still a considerable amount to figure out and the SEC is hard at work trying to keep up on the variety of different angles people are coming to them with regard to blockchain use cases. With spurious discussion around standards happening on the development front, there should be a time soon where compliance and token development intertwine.