ARTICLE
5 September 2017

SEC Issues Warning About Potential Cryptocurrency Scams

KL
Herbert Smith Freehills Kramer LLP

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The SEC issued a warning about investing in companies promising to raise capital by selling cryptocurrencies such as Bitcoin and Ethereum.
United States Corporate/Commercial Law

The SEC issued a warning about investing in companies promising to raise capital by selling cryptocurrencies such as Bitcoin and Ethereum. The agency told investors to be wary of buying stock in companies that tout "initial coin offerings," sales of units of valuable currencies run through electronic ledger systems. The warning reflects the agency's increasing attention to cryptocurrency trading. A series of ICO scams and cybersecurity vulnerabilities prompted the SEC to take a closer look at cryptocurrency trading. In a July report, the agency told investors that ICOs could be considered securities trades under federal law, meaning companies would have to register most sales with the SEC.
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