The current situation
In an interview conducted with CNBC crypto Trader, Preston Byrne-a renowned attorney at the ASI and the originator of Monax- gave his opinion on the recent situation. He spoke regarding the situation of United States standing at risk of being officially excluded by SEC from the ICO market. He went on to speak about the possible risks that companies can encounter if they register in the US but not with SEC before carrying out an ICO.
Byrne then stated that the SEC did not prohibit ICOs from getting registered, but they have just declared that ICOs need to be registered. However, if this is not the case, then the ICO must be a part of an exemption. This can be one of two things; either it could be a private placement deal like the Simple Agreement for Future Tokens ( SAFT ) under Regulation D.
It can also be the exemption in regulation S where the ICO publishers who are established abroad and have no touch points from the US are going through the process of complying in order to avoid having US touch points.
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What is the solution?
He went on to say:
“So your options really are: find one of those exemptions which applies and get a lawyer who will give you a very conservative opinion about that or go directly to the SEC and ensure that your token is registered and that you’re making the appropriate disclosures on a quarterly basis.”
Byrne continued to speak about the recent risks confronted by ICOs which helped raise funds in 2016 and 2017, through the ICOs that were registered in the US but not with the SEC. The attorney then added that such enterprises have some options when encountering a compliance issue such as meeting with the HEC and agreeing to a solution. This was obviously the best course of action to take.
Another option would be the rescission, where you could make your investors wind up the whole deal and lay off the contract. This process could be done while you reconstitute the deal and try hard to get the deal offshore.
Byrne further added that it would not be ideal for startup companies to engage in legal battles against the SEC. Whereas established companies which have already earned hundreds of million dollars by selling tokens can stand up against the SEC In court.
Stating that the situation varies from company to company, he further added that the ideal solution for most companies would be to go to the SEC. Adding that they have actually given a final warning this time to the crypto space whereas there might still be ways to compensate by paying certain fines but in order for this to happen the companies have to cooperate in one way or another. This has to be done for the betterment of all those involved. Otherwise, everything may just go downhill.