US SEC Investigates Cryptocurrency-related companies

3 August, AtoZ Markets The US Securities and Exchange Commission (SEC) has sent reportedly sent information requests to a number of the US brokerage firms that are engaged in cryptocurrency trading. According to some of the online reports, this move comes as a part of the regulatory attempt to get a hold of the rapidly evolving cryptocurrency market. 

US SEC Investigates Cryptocurrency-related companies

Aside from this, the investigation initiated by the US SEC also looks into the brokers’ business practices and the way they deal with clients. Moreover, the regulator examines the fees generated from cryptocurrency trading, ICOs and financing. The SEC’s requests also look for information regarding the structure for sales, marketing materials, clearing agreements, and details concerning personnel and advisors involved. 

Reportedly, the regulator is concerned that in many cases, retail investors are not aware of the risks involved in the cryptocurrency investment products. 

The latest investigation is allegedly increasing the regulatory pressure on the local cryptocurrency sector, according to online reports. In addition, this scrutiny follows a number of warnings that suggested that cryptocurrency-related activities might be breaching securities laws. The CEO of SEC, Jay Clayton has stated that the ICO market is a “rife with fraud.”

SEC Crypto Initiatives

The US regulators have been active in the sector, thus causing a number of companies to suspend their offerings. Moreover, the SEC has frozen assets of several cryptocurrency firms, closed some ICOs and suspended trading in firms that have been dealing in cryptocurrency. 

Earlier this July, the US SEC has reportedly rejected the second application for a Bitcoin exchange-traded fund filed by Winklevoss twins. The regulatory body has also highlighted that their decision regarding the application was not based on whether cryptocurrencies or Blockchain technology “[have] utility or value as an innovation or an investment.”

In addition, the SEC has stated that it is concerned about the fact that a big portion of Bitcoin trading takes place on “unregulated exchanges outside the United States.” It also noted the low liquidity of cryptocurrencies as one of the reasons for its concern.

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