AriseBank’s $600 million ICO has been taken down by the SEC which has now formed an intra-agency unit devoted exclusively to researching and shutting down ICOs which violate US securities laws. Tether is a now a high risk token which may or may not be a fraud with open investigations. Its near-term destiny may have a very significant effect on the entire crypto market for a long time. If it turns out to be a massive fraud all cryptocurrencies will fall and regulators around the world are sure to crack down and pass new regulations on all types of crypto ventures.
When this industry was burgeoning just a few short years ago, its founders and experts warned us that to remain off the radars of the regulators this industry needed to ‘police’ itself and shut down bad actors before the government gets involved. This requires diligence, integrity, and common decency to reject fraud and dishonesty in all its guises, even if it puts the industry in a poor light. We must all do our part to weed out bad actors to protect the unsuspecting; the same folks who were taken advantage of by unscrupulous brokers and investment managers in the multitude of ponzi scandals.
We have to be more proactive in calling out the shady and suspicious deals and forewarning the public of the potential consequences of some of the risky ventures which are out there and being pushed out daily. The public at large is not sophisticated and is unfortunately ruled by fear and greed; it will jump in head first if it collectively smells blood. All too often, the pool turns out to have been drained and investors end up crippled financially, having invested their life savings into a scam. BitConnect comes to mind…
If you have the intention of launching an ICO you should be proud as there’s nothing wrong with entrepreneurship and creating a benefit to society; however, be forewarned that regulatory authorities are scouring the crevices of the internet seeking out fraudsters, scammers, liars, and law violators. If you are selling securities you need to register or take advantage of an exception such as 506c or crowdfunding.
If you are not selling securities then you need to have a valid legal opinion to that effect to be sure that you are proceeding within the regulatory scheme. A purely “utility” token would not be deemed a security and you would most likely be in the clear to launch your token offering free and clear of regulations. Unfortunately, I have seen many tokens masquerading as utility tokens which are in fact securities. Even ICO offering website legal opinions frequently describing tokens as utility tokens with terms which have nothing to do with how “security” status is determined are all too common. For example it is irrelevant if a token grants the holder any equity or voting rights in the offering entity or platform.
Tread lightly in this space; it is full of booby traps for the unwary. This firm will thoroughly review your token and its function within your platform, and provide a solid opinion as to its status which you can rely on. If necessary, this firm will assist you in shifting your token function from a security-based to a utility-based token or registering the offering with the SEC or taking advantage of an exemption from registration.