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SEC: What About ICO Enforcement?



SEC could be preparing to drop huge actions on issuers of initial coin offerings (ICOs).

“It’s probably a better course of action if you’re anywhere close to being a security, to just assume that it is and go forward with that presumption in mind.”

According to Nicolas Morgan, a former lawyer for the U.S. government agency in charge of  regulating the securities industry, the SEC is likely to roll out a sort of “assembly line” of enforcement actions against the nascent industry in the coming years.

He said:

“You might be right that your ICO is not a security, and some judge, at the end of the day, may agree with you, but is it worth the expense and distraction to get that answer from a judge?”

In an interview with CoinDesk Morgan spoke about how the SEC will proceed in the next months with its enforcement.

SEC Enforcement

CoinDesk: At what point will the SEC and others weigh in more formally on ICOs? 

Morgan: You’re not going to get a satisfactory answer that [your token is] not a security until the end of the SEC investigation process, in litigation, when you might get a judge that agrees with you that your ICO is not a security.

But it doesn’t even necessarily have to be at trial; a trial happens at the end of a legal proceeding. For example, in the Zaslavskiy case – the diamonds and real estate ICO in Brooklyn, New York – the SEC had to go into court, they filed a complaint, they [effectively] said “this token is a security.”

Then they got a preliminary ruling from the judge in that case that indicated that it probably was a security. That’s as close as we’ve gotten to a ruling by a judge.

Or take the Tezos class action, as another example: private lawsuit, filed in San Francisco state court. Not the SEC.

The plaintiffs and their lawyers have alleged that [Tezo’s ICO] involves a security. I have a feeling the very first line of defense by the defendants will be, “This is not a security. These particular laws don’t apply.” But no judge has ruled on it.

We don’t have judicial rulings on this, and we won’t have them for probably several months.

What does a startup need to do if it wants to proceed as if its token is a security, then?

If you’re proceeding on the assumption that you have a security and you want to have an ICO, the first thing is to decide whether you’re going to offer the tokens on a registered basis or pursuant to an exemption to registration. That’s probably the first issue that needs to be confronted.

Then there is: How will your sales and efforts selling ICOs or tokens be judged in hindsight? Use of proceeds is probably the biggest single representation to potential investors that will be scrutinized by regulators or private plaintiffs after the fact.

The use of proceeds has to be accurate. So that’s step one.

Step two: If you’re going to tout the qualifications of your board of advisors, make sure they actually are advisors and have agreed to be listed as such. And make sure when you’re describing either your advisors or your management, that the descriptions are accurate, not exaggerated.

Those things will be scrutinized.

A third thing is how you’re describing what it is you’re going to do. Not in terms of how the money is going to be spent, but, “We have certain milestones. We are going to launch this platform by January.” Well, if you say that, and January comes and goes and no launch has happened, that may be an issue.

Be careful how you characterize what you do operationally.

Full interview at





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SEC, CFTC Crypto Meeting in the US




The Securities and Exchange Commission(SEC) and Commodity Futures Trading Commission (CFTC) meeting recently took place today, Feb. 6. The written testimonies of Jay Clayton and J. Christopher Giancarlo, the chairmen of the SEC and the CFTC respectively, have now been released publicly.


SEC chairman Jay Clayton talked about the importance of distinguishing between ICOs as securities and non-securities.

Clayton said:

“Investors should understand that to date no ICOs have been registered with the SEC, and the SEC also has not approved for listing and trading any exchange-traded products (such as ETFs) holding cryptocurrencies or other assets related to cryptocurrencies. If any person today says otherwise, investors should be especially wary.”

A co-authored article in the Wall Street Journal showed both officials’ perspectives on the issue of cryptos, appearing during the World Economic Forum 2018 in Davos last month.

During the event many politicians had a voice to talk about the importance of cryptocurrency regulations.

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UAE ICO Warning




UAE Securities and Commodities Authority (SCA) issued a document on Sunday, Feb. 4 to warn investors about the risks of Initial Coin Offerings (ICOs).

UAE Warning


In the recently issued document, the SCA speaks about investors involved in ICO fundraising campaigns and say that they have to assume all the risks, related to the digital token-based fundraising activities which are not regulated by the UAE, therefore there can be no protection provided if any fraud were to ocurr.

The biggest risks pointed out by the SCA, are high volatility of ICOs on secondary markets, misleading or false details in ICO offerings, and common unawareness of potential costs and gains shared by investors

The SCA mentioned the huge risks of investing in foreign ICOs, stating that it may be a hard task to verify the proper regulatory compliance of these fundraisers and track the money invested as it leaves the UAE.

This is not the first time that the country’s government issues a warning for the safety of their its citizens about the risks of ICOs.

Back in October , 2017, Abu Dhabi’s Financial Services Regulatory Authority (FSRA) announced its new guidelines ICOs and cryptocurrencies.

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Blockchain News

Interview with Blockchain Expert Amber Baldet




In a recent interview with Quartz, expert Amber Baldet the “Madonna of blockchain” talked about knowing your worth, how the financial crisis gave her enough clarity to handle herself, and why now is the time to be a technologist.

Back in December she said:

“I sit in the middle. I’m a product person who knows about technology. Depending on the community I’m in, I wear different hats,”

Quartz: Baldet

What’s your big idea that other people aren’t thinking about or wouldn’t agree with? Why is it so important?

The financial industry has long been a consumer of open-source software, but is just beginning to share its own code with the world. Freely available, high-quality platforms built to meet the requirements of the most demanding banks in the world offer a tremendous opportunity to flatten the divide between first-world economies and everyone else.

Traditionally, most software is developed regionally, and a lack of global standardization isolates markets technically, even when people want to come together. By putting real money into first-class design and development, then “giving away” the result, we create huge opportunities for financial inclusion and business growth that more than pay for the initial investment.

Blockchain technology has been a catalyst for incumbent institutions to finally “get” the value of an open-source approach. We have an opportunity to either re-create walled gardens of the past or build a next-generation internet of value that changes how we connect in a way we haven’t seen since the rise of social media. It’s a very exciting time to be a technologist.  

What behavior or personality trait do you most attribute to your success?

I’m good at bouncing quickly between high-level abstractions and granular details, as well as transforming complex ideas to be relatable for diverse audiences. I also have what my mother refers to as an “acerbic wit.” This means that often when I give deeply technical talks, the feedback is, “Hilarious, I learned a lot!” And that’s the goal: to get people not just to listen, but to feel like they get it and are inspired to learn more, and ultimately get involved.

If you could make one change to help women at work, what would it be?

Anonymized salary transparency across the industry would make a huge difference in how underrepresented populations price themselves, as well as encourage fair play and competitive job markets.

What’s the best advice you’ve ever received?

The CEO of the first boutique sell-side firm I worked at was a quintessential old-school trader from Brooklyn. He once hung up the phone after a particularly heated conversation with a counter-party, pointed right at me and said, “Never apologize.”

“Never” is a strong word, but we have all heard that women often say “sorry” reflexively. Since then I’ve tried to apologize genuinely, and only when I mean it.


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