SEC launches wide-ranging digital currency probe: report

SEC launches wide-ranging digital currency probe: report
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The Securities and Exchange Commission (SEC) has sent out a significant number of subpoenas and information requests probing companies and advisers that work in the cryptocurrency or digital token industry, reports The Wall Street Journal.

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The actions come after warnings from the SEC about how it would examine and potentially increase enforcement action on digital tokens and cryptocurrencies. The agency has previously taken action on cryptocurrency scams and what it believed to be unregistered securities masquerading as initial coin offerings (ICOs) — a fundraising method for cryptocurrency-based projects.

The subpoenas reportedly demand information on ICOs and their presales. SEC Chairman Jay Clayton has been critical of the practice of fundraising through ICOs, saying during a Congressional hearing earlier in the month that he suspects many ICOs violate SEC regulation.

“Many ICOs are being conducted illegally," Clayton told lawmakers at the time. "They are not following securities laws. Some say that this is because the law is not clear. I don’t buy that for a moment.”

The popularity of cryptocurrencies and ICOs have ballooned over the past year, as prominent digital currencies like bitcoin and ethereum saw their market capitalizations grow by billions of dollars. In 2017, ICOs amounted to $6.5 billion in fundraising.