The SEC Goes After Scandalous Crypto Firms But Recovers Little Money for Jaded Investors So Far


The U.S. Securities and Exchange Commission (SEC) has been trying to have a more active stance in the virtual currency space. During the last few months, the regulatory agency has been issuing more enforcement actions against cryptocurrency-related companies and Initial Coin Offerings (ICOs). However, the agency was only able to collect around $36 million according to a recent report released by the WSJ.

Regulators in the United States took down 90 cryptocurrency scams but were able to recover just a small part of the funds that were stolen to investors. Between 2017 and 2018, several new Initial Coin Offerings were launched to the market and some of them gathered several millions of dollars. Nevertheless, some of them were just fraudulent companies trying to steal individuals’ funds.

At the moment, there are several ongoing investigations regarding crypto-related scams. The regulatory agency has seen an increase in the number of investigations into ICOs. There are already some companies that have been reached by the SEC and must register their tokens as securities.

As many of these probes are still ongoing, the regulatory agency was not able to give back to users more than $36 million. In some cases, the companies involved in irregular situations can keep operating, generate revenue and repay investors. However, fraudulent companies are not able to keep operating in the space.

AriseBank is one of the firms that is being investigated by the SEC. It raised close to $21 million from thousands of investors from all over the world. Other enforcement actions issued by the SEC reached AirFox and Paragon, which will have to give back investors their funds and must pay a $250,000 fine.

At the moment, the cryptocurrency market does not have a clear regulatory framework. This is something very negative for the space. Companies are not able to keep growing and investing funds if they do not have a regulatory framework that allows them to do it. Furthermore, investors are also not protected in case one of these ICOs runs away with the funds they’ve invested.

The SEC has also suggested that most of the ICOs in the market are selling unregistered securities in the United States. In addition to it, earlier this year, the SEC created an ICO website that aimed at showing investors how a ‘too good to be true’ ICO looks like and how easy is to lose money with them.

There are other nations around the world such as Malta, Switzerland or Japan that have been working so as to have a better regulatory framework for crypto companies and blockchain startups.

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