SEC: IEO may be unregistered securities, the relevant exchange may need to apply for a stock exchange

The U.S. Securities and Exchange Commission (SEC) has a useful piece of advice for cryptocurrency projects: To make your token sales more secure, you need to do more than just change a letter.

The SEC today urged cryptocurrency investors to "walk cautiously" before putting money into the IEO. It points out that online trading platforms that provide IEOs are often not registered with the SEC and may not have performed "due diligence" before listing.


The federal agency has issued similar warnings about ICOs in the past. ICO is a token sale activity where companies raise money for their projects by selling tokens or cryptocurrencies. The SEC said that these tokens may actually be unregistered securities and investors should carefully consider them before participating. In fact, after a series of unscrupulous project scams, ICOs have had some negative meanings, and many companies no longer use the term.

But IEO's promises will be different. Rather than having companies sell their own tokens, let cryptocurrency exchanges do the work. This gives these tokens a mark of approval, as it is guaranteed that these tokens can be traded on the exchange. Both Binance Launchpad and Bitfinex Token Sales belong to the IEO platform.

One problem, though, is that some coins are still worthless, costing investors thousands of dollars.

This is what the SEC is worried about. In today's investor alert, the agency wrote:

"Statements regarding new technologies and financial products (such as those related to digital assets), as well as statements that IEOs are subject to censorship by the trading platform, may be used inappropriately to attract investors with false promises of high returns in new investment areas. "

In addition, it noted that some IEOs may still be unregistered securities offerings. The registration process requires companies to disclose certain information about products and businesses to investors. Without this information, investors may act blindly.

In addition to companies that have tokens, trading platforms that provide tokens may have to register with the SEC as a national stock exchange or be exempt.

The SEC recommends that investors follow two rules of thumb: First, stay away from IEOs who do n’t talk about federal securities laws. Second, the agency said:

"If the IEO or the sponsor of the digital trading platform hosting the IEO declares that they have been approved or registered with the SEC, please be careful. The SEC has never approved any IEO projects." The SEC filed a registration statement and other documents.)

The SEC issued a final warning to overseas IEOs, stating that “if the IEO is provided to individuals in the United States through the website of an online trading platform located overseas, federal securities laws may still apply.” However, if fraudulent behavior causes investors to fail , Then such overseas-issued token investors may have little legal recourse.