Monday, June 17, 2019

USA Regulators Point ICOs As Major Source Of Scams

USA regulators point ICOs as a major source of crime and scams, in a report outed by them today, In the report, they also detail the policy that they have had while fighting this kind of scams, and how they are shifting their resources more and more to be able to fight these scams.

USA Regulators Point ICOs As Major Source Of Scams

USA Regulators Point ICOs as a major source of scams in a recent report outed today. This report, released by the SEC (Securities and Exchanges Commission), focuses on the performance and the efficiency that the SEC has had while fighting these crimes in relation with the allocation of resources for doing it.

In the report, they reveal that ICO’s have been the most worrying cryptocurrency related source of scams in the last year, and most cryptocurrency related cases that they have carried out are related to ICOs. ICOs are a new trend of getting resources for a startup business that involves trading money for tokens. These tokens grant the owner the possibility of accessing determined functions in a platform.

The problem with these initiatives is that most of them aren’t even clear in their objectives, and in fact, some have disappeared after gathering the resources to build the platform, being downright scams.

ICO’s Grew In FY 2018

The report shows how ICO related crimes grew from being almost non-existent to being one of the top priorities in the agency. They state that:

In FY 2018, the Commission brought 20 stand alone cases, including those cases involving ICOs and digital assets. At the end of the fiscal year, the Division had more than 225 cyber-related investigations ongoing.

This great growth in cryptocurrency related crimes that have ICOs as their main culprits is also a natural result of ICOs being more and more popular as a way of getting financing for projects that would not pass an IPO inquiry. In fact, ICOs let their issuers get financing before even having built something. IPOs are more of a stake selling to grow an already existent business.

That is why ICO’s have continued to grow, and that is why the crimes related to ICO fraud or abuse have also grown in time.

The SEC has been ever vigilant carrying big cases to exposure and showing people the dangers of doing insecure ICO investments, even going to the extremes of setting up a mock ICO page to show how a scam investment would look like, and launched the FINHUB, a hub of information for advising cryptocurrency startups about compliance issues.

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