The US Securities and Exchange Commission (SEC) has cracked down on an initial coin offering (ICO) called PlexCoin for illicitly distributing securities without the approval and authorization from the SEC.
SEC Steps In
On June 20, 2018, the U.S. SEC disclosed that local authorities have requested the police to freeze the assets and holdings of PlexCoin project operators, alleging Dominic Lacroix, a Canadian securities’ violator, for unlawfully utilizing secret accounts and personal accounts of other individuals to launder money received during the token sale.
The SEC’s litigation release read:
“The SEC’s request for an additional asset freeze, filed in federal court in Brooklyn, New York, alleges that, since the original freeze in December, Lacroix had been using secret accounts, including an account in his brother’s name but which he controlled, to improperly dissipate for personal use digital assets obtained from investors during the PlexCoin Initial Coin Offering (ICO).”
Clear Intent of Shutting Down Securities Tokens
Jay Clayton, the chairman of the SEC, has previously said every ICO he has seen is a security and that any token that primarily benefits a single individual or organization can be considered a security on the existing definition of a security. Clayton further emphasized the organization will not change the definition of a security to embrace ICOs.
This week, the SEC clarified, for the first time in the history of the cryptocurrency sector, that bitcoin and Ether, the native cryptocurrency of the Ethereum blockchain protocol, are not securities.
At the Yahoo Finance All Markets Summit, SEC Division of Corporate Finance director William Hinman said:
“And putting aside the fundraising that accompanied the creation of Ether, on my understanding of the present state of Ether, the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions. And, as with Bitcoin, applying the disclosure regime of the federal securities laws to current transactions in Ether would seem to add little value.”
To Coinbase, the categorization of Ethereum as a currency rather than a security directly meant Ethereum Classic, a hard fork of the Ethereum blockchain, is also by definition, not a security. Almost immediately after the approval of the SEC of Ethereum as a currency, the biggest cryptocurrency exchange and brokerage in the world added Ethereum Classic to its platform.
Intent Behind the SEC
The categorization of bitcoin and Ethereum, which evidently are not securities, as securities would have shut down the entire blockchain sector in the US. The optimistic comments from the SEC has demonstrated the agency’s plan to embrace the blockchain industry and sustain its cryptocurrency market while protecting investors and cracking down on ICOs whose sole purpose of existence is to defraud investors.
By US law, as explained by Chris Concannon, the president of the Chicago Board Options Exchange (Cboe), one of the largest futures market in the global finance sector, distributing or selling tokens generated by ICOs categorized as securities by the SEC could result in investors being punished by local financial authorities as unauthorized security distributors.
As such, especially for investors from the U.S., being involved in projects like PlexCoin, both directly and indirectly, could lead to a series of legal troubles if due diligence is not conducted beforehand.
The post Another ICO Cracked Down by SEC, Even the Investors Can be Punished by Law appeared first on BTCMANAGER.
Source: BTCManager.com
Original Post: Another ICO Cracked Down by SEC, Even the Investors Can be Punished by Law
