Regulators in the United States have placed tight restrictions on the crypto industry over the last few months as they strive to protect the country’s citizens from the risks that come with the asset class.
Several crypto related businesses and exchanges have stopped operating in the country due to the difficulties that come with circumventing these regulatory frameworks.
The Securities and Exchange Commission (SEC) has penalized another crypto firm for conducting an initial coin offering (ICO) and failing to register the tokens as securities. The SEC has instituted legal action against ICOBox, a crypto related firm which provides ICO marketing services.
According to the SEC, Nikolay Evdokimo, the founder of ICOBox, ran an illegal $14 million securities offering. The firm sold its tokens to US investors without the necessary registration for an ICO as is required under securities laws in the country.
Further complaints against ICOBox
Besides allegedly conducting an illegal sale of its securities, ICOBox is facing further complaints from the SEC. The regulatory body says that ICOBox has provided its marketing services to several crypto businesses, which raised over $650 million in token offerings.
Some of the firms which made use of ICOBox’s services include Universa, Celsius, Tokenstars, INS, Storiqa, CrowdGenie, and Crypterium, firms which are still operating to this day.
Michele Wein Layne, Regional Director of the Los Angeles Regional Office, said that Evdokimov and his company placed investors at risk by ignoring the registration requirements of securities laws, and offering them investments that are virtually worthless now.
The firm did not give these investors critical information about the investments they were getting into, and hence, denied them a chance to make informed decisions.
SEC battle against ICOs
ICOs have been a popular token offering method in the crypto industry, but lately, they have been under increased scrutiny from the SEC. The regulator believes that some digital tokens can be considered as securities and as such, they should be registered with the SEC under broker deals.
Regulations guiding crypto offerings lack clarity, and this results in confusion about what constitutes securities. The SEC has taken action against several crypto related companies which have conducted ICOs in the US.
The regulatory body has suspended trading on exchanges found guilty, frozen the assets of some crypto firms, and stopped many other ICOs.
Some leading exchanges, such as Binance, have resorted to creating US-centric exchanges in a bid to avoid being on the wrong side of US regulations. Other crypto exchange operators are building platforms for the trade of digital tokens which are specifically considered as securities.