ECONOMY/SEC: “The Securities and Exchange Commission on Tuesday [7-25-17]moved to restrain a hot new fundraising method involving sales of digital coins, saying rules meant for everyday stock sales may apply to these offerings, too.
The comments were the first from the SEC specifically to address initial coin offerings, a nascent area where more than $1 billion has been raised so far this year, but which has also been criticized for a lack of standards.
The SEC’s report will likely ‘chill the waters a bit for these offerings,’ said David B.H. Martin, a senior counsel at Covington & Burling LLP who was formerly a top SEC official.
The price of bitcoin and ether, the two most popular cryptocurrencies, fell on the announcement. Bitcoin lost 7% of its value, trading at $2,592. Ether was also down 12% to $201, according to CoinDesk.
The SEC report was related specifically to a coin offering that debuted last summer called DAO, which raised more than $150 million for an investment fund before a hacker exploited its code and stole $55 million. The commission decided against pursuing an enforcement action against the DAO’s creators, but rather used the report to clarify its authority over the burgeoning market and to raise awareness of potential problems.”
-Paul Vigna and Dave Michaels, “SEC Says It Will Patrol Red-Hot Virtual Coin Offerings,” The Wall Street Journal online, July 25, 2017 07:54pm