The SEC Ruling Might Mean ICOs Paying Back Millions

While the cryptocurrency markets have experienced lows this 2018, with Bitcoin currently trading around $3300, the news is getting worse for initial coin offerings (ICOs).

ICOs have been strongly criticized by the U.S Securities and Exchange Commission if they should be categorized as securities. The commission last month announced a ruling which could broadly implicate the industry’s landscape, when it accused two startups of violating its laws.

These projects, which include Paragon, somehow raised millions through issuance of tokens to investors not accredited, a breach which the SEC feels requires legal action.

Since this issue surfaced, Paragon announced that it has no choice but to make a refund to investors, which has led to some uneasiness among other projects which could face the same fate.

Cryptocurrency hedge funds that made great returns from investment through buying into ICO projects during the 2017 bull run, could face the same situation, where projects will have to make an en masse refund to investors.

Bloomberg reported that this scenario for ICOs is even more complicated as a result of the failure of a good number of crypto projects to register with the Exchange Commission, coupled with selling tokens to individuals lacking the necessary requirements to be accredited.

While some have given kudos to ICOs as one innovative process to erupt from cryptocurrency development, other perceives the industry to be budding with corruption.

In contrast to the traditional method, ICOs makes it possible for startup companies to issue and fund projects to investors in no time as well as selling to Main Street investors directly.

However, with the ruling of the SEC to be applied to other currencies asides those announced last month, hedge funds that backed ICO projects all through 2017 and this 2018 might end up holding the bill as a result of the returns of investor funds.

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