SEC Chair 'Optimistic' on Efforts to Catch ICO Bad Guys

The chairman of the Securities and Exchange commission offered new remarks on the topic of ICOs earlier today.

AccessTimeIconOct 4, 2017 at 9:00 p.m. UTC
Updated Aug 18, 2021 at 7:06 p.m. UTC

Presented By Icon

Election 2024 coverage presented by

Stand with crypto

The nature of initial coin offerings (ICOs) makes it harder to catch fraudsters compared to penny-stock scams, the chairman of the Securities and Exchange Commission (SEC) told a Congressional committee today.

Jay Clayton appeared before the House Financial Services Committee during a session dedicated to the SEC. The event covered a range of topics, including a hack of the ageny’s corporate filing system, EDGAR, last year.

  • Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
    13:18
    Bitcoin Mining in the U.S. Will Become 'a Lot More Decentralized': Core Scientific CEO
  • Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
    05:10
    Binance to Discontinue Its Nigerian Naira Services After Government Scrutiny
  • The first video of the year 2024
    04:07
    The first video of the year 2024
  • The last regression video of the year 3.67.0
    40:07
    The last regression video of the year 3.67.0
  • Yet just after the recess, Congressman Ed Perlmutter (D-CO) asked about Clayton’s position on ICOs, remarking that “it reminds me of the old days with these penny stocks.”

    Clayton – who said last week that he is "concerned" about the risk of the funding use case being used to facilitate pump-and-dump frauds – echoed those comments, stating that he believes his agency is up to the task of policing token sales.

    He told the committee:

    “I’m cautiously optimistic about the division’s enforcement of this. They know this is a ripe area for pump-and-dump. Pump-and-dump – it’s actually easier here than it is in the penny stock area, because it’s all electronic, it’s all anonymous, [and] it’s harder to catch the bad guys at the end of the day.”

    The SEC chair also suggested that the prevalence of potential fraud could hamper wider adoption of the tech in capital markets. Outside of the ICO use case – through which startups or other parties can issue cryptographic tokens in an effort to fund or bootstrap a new blockchain network – market operators have looked at the tech as potential replacements for existing trading and post-settlement systems.

    But according to Clayton, that work could be impaired – particularly in the absence of wider education on the risks involved with ICOs.

    Disclosure

    Please note that our privacy policy, terms of use, cookies, and do not sell my personal information have been updated.

    CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. CoinDesk has adopted a set of principles aimed at ensuring the integrity, editorial independence and freedom from bias of its publications. CoinDesk is part of the Bullish group, which owns and invests in digital asset businesses and digital assets. CoinDesk employees, including journalists, may receive Bullish group equity-based compensation. Bullish was incubated by technology investor Block.one.


    Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.