The Securities and Exchange Council of the United States, over the past couple of weeks, has launched multiple investigations upon companies and individuals trading in high volumes of cryptocurrencies. As reported earlier, the SEC wants to tighten laws and regulations regarding cryptocurrencies in the US, particularly aimed at curbing out ICO related fraud and pyramid schemes.
As a part of their investigation, the SEC has sent out a number of subpoenas. 80 companies which deal with cryptocurrencies have been subpoenaed. This includes some of the most reputable names in the market such as the $100 Million cryptocurrency fund created by TechCrunch founder Michael Arrington. As per Arrington, pretty much every cryptocurrency fund based in the US has received this subpoena from the SEC.
Arrington revealed on CNBC that his fund was subpoenaed and that he has no problems with it. He stated that he is looking forward to comply with any regulations that the SEC sets for such firms. In the past, SEC has stated on multiple occasions that digital coins are subjected to regulations - but has failed to specify which ones. It still remains unclear whether securities laws apply to cryptocurrencies.
Thes subpoenas were issued by the SEC offices in New York, San Francisco and Boston. There is a lot of uncertainty when it comes to laws that govern cryptocurrency in the United States. The uncertainty is at such levels that some companies have chosen to bar US Based investors to invest into their offerings to avoid any legal confusions. Moreover, some cryptocurrency based companies have moved offshore due to these uncertain and unclear regulations. As per Arrington, these uncertain laws have resulted in the US ‘freezing itself’.
The SEC, however, has been investigating into this matter for some time now - and is expected to define clearer laws soon. The SEC has been showing an active interest in cryptocurrencies since about a year. Jason Gottlieb, a partner and head of the cryptocurrency litigation team at Morrison Cohen, states that the SEC investigations are expected to continue throughout the year.
As per him, the SEC investigation isn’t going to do much for cryptocurrency regulations. He expects a “hodgepodge of court decisions” from all the SEC rulings. Moreover, he also believes that the Supreme Court will have to involve itself in this investigation at some point of time to resolve issues.
While the SEC investigation subpoenas these cryptocurrency funds, they are just being investigated to understand the business and to make sure that the businesses are all clean. The primary target on the SEC’s crosshairs at the moment are ICOs - more specifically, ICO Frauds - which are rising in number with every passing day. Exchanges which are involved in trading unregistered securities would also be the SEC’s target in this crackdown against crypto-crime and corruption.