U.S. SEC is scrutinizing overnight blockchain companies - chairman

Crypto

22/01/2018 21:31

WASHINGTON, Jan 22 (Reuters) - The U.S. Securities and 
Exchange Commission (SEC) is scrutinizing public companies that 
change their name or business model in a bid to capitalize upon 
the hype surrounding blockchain technology, SEC Chairman Jay 
Clayton said on Monday. 
    Dozens of little-known companies across the globe have seen 
their share prices leap in recent months after unveiling plans 
to enter the bitcoin industry or that of its underlying 
distributed ledger blockchain technology.  urn:newsml:reuters.com:*:nL4N1OM3ZC 
    In December, the SEC temporarily suspended trading in the 
shares of Crypto Company  CRCW.PK , a small firm that saw its 
stock rise more than 2,700 percent after signing a deal to buy a 
cryptocurrency data platform.  urn:newsml:reuters.com:*:nL4N1OJ48X 
    Clayton warned that it was not acceptable for companies 
without a meaningful track record in the sector to dabble in 
blockchain technology, change their name and immediately offer 
investors securities without providing adequate disclosures 
around the risks involved. 
    "The SEC is looking closely at the disclosures of public 
companies that shift their business models to capitalize on the 
perceived promise of distributed ledger technology and whether 
the disclosures comply with the securities laws, particularly in 
the case of an offering," he told a conference on Monday. 
    The chairman also said the SEC had seen "disturbing" 
evidence that legal professionals have been wrongly counseling 
clients that initial coin offerings, whereby cryptocurrency 
start-ups solicit funds from investors who receive tokens in 
return, do not need to comply with federal securities law. 
    The SEC has previously said that such fundraisings should 
comply with securities law and has warned investors more broadly 
over the risks of cryptocurrency fraudsters.  
    "I have instructed the SEC staff to be on high alert for 
approaches to ICOs that may be contrary to the spirit of our 
securities laws and the professional obligations of the U.S. 
securities bar," Clayton said. 
     
 
 (Reporting by Michelle Price; Editing by Marguerita Choy) 
 ((michelle.price@thomsonreuters.com; +12026041711; Twitter: 
@michelleprice36;)) 
 
Keywords: USA SEC/BLOCKCHAIN