US SEC Cautions Crypto Investors

The US Securities and Exchange Commission (SEC) has released its second warning this month to those investing in digital currencies. The governmental body advised those involved in Bitcoin and other cryptocurrencies to exercise caution. SEC Chairman Jay Clayton, alongside Commissioners Michael Piwowar and Kara Stein, said several companies hosting Initial Coin Offerings were not complying with federal and state securities regulations.

They continued to state that while legislators were trying to keep pace with the rapidly emerging markets, regulating them is difficult so investors must use due diligence when deciding to enter crypto investments.

“The SEC and state securities regulators are pursuing violations, but we again caution you that, if you lose money, there is a substantial risk that our efforts will not result in a recovery of your investment,” the Commissioners stated.

As mentioned, the SEC has issued two warnings in less than a month. Jay Clayton on December 11 warned those who wish to participate in Initial Coin Offerings. The statement of the SEC Chairman came a couple of hours after the Commission was forced intervene in an ongoing ICO by a restaurant review application. The issue was caused by the failure of the company to register as security.

“A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that … there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation… If an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost.”

The Commission appears to be more concerned with Initial Coin Offerings than it does with Bitcoin and other cryptocurrencies even though the frequency with which the SEC is issuing warnings surrounds the digital currency world. The cautionary words are intended for anyone who wishes to invest.