FINMA Annual Report Highlights ICO Enforcement Actions


The Switzerland Financial Market Supervisory Authority (FINMA) has published the main conclusions of its 2019 annual report. FINMA has found a violation of the AML law in more than ten ICOs and has brought charges against those responsible.

02 April, 2020 | AtoZ Markets – FINMA has published its 2019 annual report, which highlights the developments regarding security token offerings (STO) and distributed ledger technology (DLT). FINMA officials stressed that there are always “difficult questions” that the group faces. In particular, regulators are faced with issues regarding the trading, custody and settlement of different types of tokens. Besides, FINMA continues to receive questions on any licensing requirements applicable to the central securities depository of the Financial Market Infrastructure Act (FMIA).

It is important to note that FINMA regulators believe that token securities should be subject to an updated regulatory framework. More specifically, regulators wish to create a new category of authorization to trade, settle and custody securities under a single entity. The regulators also considered how the topics of sustainability and the risks posed by climate change should be dealt with the context of supervisory law.

Read More: FATF Rates US as “Largely Compliant” With Crypto Regulations

FINMA Carried out 60 ICOS Investigations in 2019

FINMA has also included data on initial coin offerings (ICO) for 2019. It is important to note that last year, 1,185 individual ICOs took place in the group’s jurisdiction. The group has opened investigations into around 60 of these ICOs. Of these 60 investigations, 30 resulted in enforcement action. Surprisingly, these figures are down from 2018. Forty-two investigations resulted in enforcement action in 2018.

More specifically, FINMA has identified a violation of the Anti-Money Laundering (AML) Act in ten ICOs. Eight other cases narrowly escaped prosecution but placed on the FINMA warning list. FINMA finally launched enforcement proceedings against three companies in 2019.

In March 2019, FINMA concluded the execution procedure against Envion AG, which it launched in July 2018. As part of this procedure, FINMA appointed an investigative officer to investigate suspicious activities. The investigation showed that the company had illegally accepted funds. It accepted more than CHF 90 million from at least 37,000 investors through ICO without proper authorization. The company was acting illegally and seriously violating the supervisory law.

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