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The US Securities and Exchange Commission (SEC) is actively repressing initial cryptocurrency projects (ICO) and a senior official said dozens of cases are underway at the start of this year.
The next wave of reinforcement by the SEC, stimulated by its recent agreement with professional boxer Floyd Mayweather and music producer DJ Khaled, should be influenced by social media that have promoted ICOs to the general public.
When is the ICO promotion a fraud?
Writers, YouTube celebrities, cryptocurrency review platforms, publications, and many other individuals and organizations could be targeted by the SEC if there is sufficient evidence to show that an individual or organization has received compensation from the ICO organizers for promote a token sale without disclosing the amount received from an ICO project to the target public.
"Any celebrity or other person who promotes a virtual token or a currency that is a security must disclose the nature, scope and amount of compensation received in exchange for the promotion," the SEC said last year. , underlining that the non-disclosure of compensation is considered a fraudulent activity.
2/2 … Social media influencers are often paid promoters, not investment professionals, and titles that are advertizing, regardless of whether they are issued using traditional or blockchain certificates, could be fraudulent. "Https://t.co/WzgvPU7Esg
– SEC application (@SEC_Enforcement) November 30, 2018
On November 28, the SEC followed its previous statement and said that investors should be aware of the celebrities who promote the tokens on the blockchain. The commission said:
"Investors should be skeptical about investment advice posted on social media platforms and should not make decisions based on celebrity specializations Social media influencers are often paid promoters, not investment professionals, and the titles they are promoting regardless of whether they are issued using traditional or blockchain certificates, they could be frauds. "
If a celebrity openly promotes an ICO after receiving a payment to do so, and ICO is considered a SEC title, the individual could be considered a violator of US SEC rules.
Most of the ICOs are titles
In the past seven months, Coinbase, the largest fiat-to-cryptic exchange in the US market, has worked with regulators to list additional digital assets on its platform.
In May, Coinbase announced its interest in the listing of Stellar (XLM), Cardano (ADA), 0x (ZRX), Zcash (ZEC) and Basic Attention Token (BAT). Fast forward almost seven months, the exchange was only able to add three of the five cryptocurrencies that it was intended to integrate.
Coinbase has been cautious about ensuring that a digital asset is not recognized as a security by the SEC because in a hypothetical case that a good listed by an exchange is declared a security by the US government, the exchange could be pursued for illicit distribution of unregistered securities.
On Tuesday, Hacked.com reported that Jay Clayton, the president of the SEC, said the commission considers most of the ICOs in the global market as titles:
"We do not believe Bitcoin is a security.Many of the ICOs you see and talk about are titles, and if you plan to offer or sell securities, you must do so in accordance with our laws.We have been clear on this, recent actions They further stressed that our securities laws apply to the ICO space and whether people are going to raise money using the initial coin offerings, or have to do it in a private placement or register with the SEC. "
The promotion of an ICO recognized as security without disclosing compensation to the target audience could result in a double penalty against the fee itself, as in the case of Floyd Mayweather who paid over $ 600,000 for receiving $ 300,000 to promote three ICOs.
Shutterstock foreground image.
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