The Chairman of the Securities and Exchange Commission, Jay Clayton, delivered a remarkable rebuke on Monday to attorneys who have helped arrange so-called “initial coin offerings” (ICOs), which are a novel and controversial form of fundraising that involves the sale of digital tokens.
Speaking at a legal gathering in San Diego, Clayton warned that some attorneys advising companies on ICOs are breaching their professional duties, and even implied that they might be the target of disciplinary actions themselves.
His words come amid a broader crackdown by the SEC on ICOs, which began took off as an alternative form of fundraising last year and allowed numerous companies to raise tens or hundreds of millions of dollars even though they lacked a product or a cohesive business plan.
When a company uses an ICO to sell a digital token (typically by means of bitcoin or another digital currency), it is basically promising the buyer a way to get access to a computer network. The token–much like a subway token–allows the buyer to get access to a service even if, as is the case with many ICOs, that service hasn’t been built yet.
The problem in the eyes of regulators, however, is that most people appear …read more
Source:: Fortune.com – Tech
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