IEO trading platforms are asking for troubles - SEC’s advisor
|- Valerie Szczepanik known as crypto czar delivers commentts at the Consensus 2019 conference .
- Some IEO operators may be engaged in borker-dealer activitties.
The platforms that offer listing for tokens issued via Initial exchange offering (IEO) for a fee may be asking for regulatory troubles, Valerie Szczepanik said at the Consensus 2019 conference on May 13.
Mrs Szczepanik is an advisor for Digital Assets and Innovation in the United States Securities and Exchange Commission’s (SEC) often referred to as the commission’s “crypto czar”. She believes that platforms that list such tokens and try to attract buyers for them act as broker-dealers, which means that they should be properly registered with the regulator.
“If they are not registered, they will find themselves in trouble in the U.S., if they have a U.S. issuer or U.S. buyers, if they are operating on the U.S. market,” she said.
To clarify the point, Szczepanik discussed the case of TokenLot platform run by Lenny Kugel and Eli L. Lewitt. They presented themselves as “ICO [initial coin offering] superstore” and actually acted as a cryptocurrency broker-dealer distributing the assets.
“This was a platform that was assisting to bring buyers to ICOs [...] In that case, there was an enforcement action charging the platform with acting as an unregistered broker-dealer and participating in the distribution in violation of the registration provisions.”
The SEC charged the company and its owners with the fine in the amount of $471,000.
In April, the SEC published guidelines to help the participant to understand whether an asset should be treated as a security. This tool is supposed to help ICO operators and token issuers to see if their offering falls under federal securities laws.
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