The SEC Crackdown on Suspicious Cryptocurrencies Is Getting Serious

[scanpay]

The U.S. Securities and Exchange Commission (SEC)’s investigation over shady behavior in the cryptocurrency market will only continue, said former chairman Harvey Pitt.

Tighter Regulation on the Horizon

SEC this Tuesday halted trading of The Crypto Co. over manipulation concerns after a massive stock leap. And the regulatory body’s cracking down on suspicious cryptocurrencies will only continue, according to former chairman Harvey Pitt who said Thursday on CNBC’s “Fast Money”:

“We’re in line for some serious regulatory responses to all of this and that will be forthcoming after the first of the year.”

Pitt disclosed that further regulation is on the way. “Everyone else is investing in it, and the price seems to be going up,” Pitt said. “That’s a real problem because there’s a lack of education and knowledge on the part of many of the people who are actually doing the investing.”

The SEC has been highly critical of tokens that operate like securities. Back in August, the regulator suspended trading in three stocks over concerns about the issuing companies’ ICOs.

Pitt identified many cryptocurrency offerings as “offerings of securities,” which therefore fit under the SEC’s legal authority. For him, that means insider trading is a very real possibility. He added:

“There absolutely can be insider trading. When people have advanced knowledge of the offerings of these interests and take advantage of the offering long before it occurs.”

Caution for Pump-and-Dump Schemes

Coupled with the SEC’s crackdown, the Financial Industry Regulatory Authority (FINRA) this Thursday warned investors of bitcoin cold-calling scams as well.

“Beware of potential stock scams when considering the purchase of shares of companies that tout high returns associated with cryptocurrencies, such as bitcoin,” FINRA wrote in the statement.

The most common scenario in which an investor can get duped is the “pump-and-dump” scheme, said Gerri Walsh, FINRA senior vice president for investor education. “Pump and dump” is a form of securities fraud common among penny stocks, in which shareholders attempt to artificially inflate the price of stock through misleading statements.

At a time when attaching “blockchain” to a company name is a surefire way to blow up stock values, there is plenty of incentive for these schemes.

FINRA issued a guideline to inform investors that investors could use FINRA BrokerCheck® to check the professional background of the individuals involved in selling the investment. The regulator warns investors to be wary of stocks with huge spikes in price, which could signal manipulation or fraud.

“We warn investors to look behind the name of the company, look behind the ticker of the stock. Take a look at a company’s filings,” Walsh said. She recommended investors look at the SEC’s list of trading suspensions to check whether the company has been deemed a threat to investors.

“There can be legitimate ways to get involved. Our concern with investors is they might field a call from a less legitimate actor,” she added.

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[European Central Bank]

surely their hands are still tied? they can only come down hard if there's some overlap with the markets they currently regulate. i don't see how they can crack down on a pure crypto ico, there has to be some stock market or fiat element in there.

they sure can declare some of these icos as securities, but if they're being run by some russian accepting monero their work will be cut out for them. i guess the accessible exchanges might feel some pressure if they try to trade these tokens.

[squatter]

The U.S. Securities and Exchange Commission (SEC)’s investigation over shady behavior in the cryptocurrency market will only continue, said former chairman Harvey Pitt.

I'm pretty disappointed with CNBC's recent coverage. In line with their recent coverage of Bitcoin vs. Bitcoin Cash (including giving Roger Ver multiple interviews to promote his agenda), they are blurring the line between cryptocurrencies and stock scams associated with them. Everything the former chairman referred to pertained to initial coin offerings (ICOs) and stocks of companies that are exploiting the current market hype. I don't see anything here about legitimate mined or minted cryptocurrencies.

[scanpay]

It is about time! Bitcoin is the future but we need it to be honest

[iamTom123]

The U.S. Securities and Exchange Commission (SEC)’s investigation over shady behavior in the cryptocurrency market will only continue, said former chairman Harvey Pitt.

I'm pretty disappointed with CNBC's recent coverage. In line with their recent coverage of Bitcoin vs. Bitcoin Cash (including giving Roger Ver multiple interviews to promote his agenda), they are blurring the line between cryptocurrencies and stock scams associated with them. Everything the former chairman referred to pertained to initial coin offerings (ICOs) and stocks of companies that are exploiting the current market hype. I don't see anything here about legitimate mined or minted cryptocurrencies.

While many of us in the Bitcoin community are more biased against the government (me including), we also have to face that in any industry especially a very booming and blooming like cryptocurrency there will always be scam artists and these people should be controlled if not totally weeded out. The government must be doing their job of guiding people so they could not be victimized by these scammers. An ICO project which can prove itself to be legal and above board has nothing to be afraid of and in fact if a project can get the official nod from the SEC then much better. We have to be concerned with new people coming into this industry just joining thinking that we have the magic wand that can convert a stone into money fast...these people have to be educated on the ins and out of cryptocurrency and the inherent risks here. I think this kind of a dramatic dynamism between the government agencies and cryptocurrency will go on as long as the industry is existing and as long as there will be people who are constantly planning on how to defraud other people as many as they can.

[baradfo]

The US government, SEC and FINRA, are actually not being as heavy handed as they could be. They are also, in the same respect, not as knowledgeable as they could be in regards to putting out their rulings. Though they are trying to regulate moderately in an effort to stop the scammers from proliferating to US customers. Any company that wants to start and pander to US customers needs to have their ducks in a row before accepting US customers and be able to show they are above board. The SEC only got involved after the DAO hack anyway, which did fall loosely into their realm when it came to securities.

[CryptoBry]

The US government, SEC and FINRA, are actually not being as heavy handed as they could be. They are also, in the same respect, not as knowledgeable as they could be in regards to putting out their rulings. Though they are trying to regulate moderately in an effort to stop the scammers from proliferating to US customers. Any company that wants to start and pander to US customers needs to have their ducks in a row before accepting US customers and be able to show they are above board. The SEC only got involved after the DAO hack anyway, which did fall loosely into their realm when it came to securities.

One thing for sure is that we could do away with the government and since the government is also playing a good role that can benefit all of us then I have no problem when these people are just doing their job. We need the government too implement regulations and laws with the aim of protecting innocent investors who can be exposed to scam artists as definitely scammers are now also partying in cryptocurrency. Right now, cryptocurrency is still in the Wild, Wild West stage but this should not last as many can be abusing such a set-up for their own personal gains. We need regulations as long as they are not actually killing the goose that lays the golden eggs.

[baradfo]

The US government, SEC and FINRA, are actually not being as heavy handed as they could be. They are also, in the same respect, not as knowledgeable as they could be in regards to putting out their rulings. Though they are trying to regulate moderately in an effort to stop the scammers from proliferating to US customers. Any company that wants to start and pander to US customers needs to have their ducks in a row before accepting US customers and be able to show they are above board. The SEC only got involved after the DAO hack anyway, which did fall loosely into their realm when it came to securities.

One thing for sure is that we could do away with the government and since the government is also playing a good role that can benefit all of us then I have no problem when these people are just doing their job. We need the government too implement regulations and laws with the aim of protecting innocent investors who can be exposed to scam artists as definitely scammers are now also partying in cryptocurrency. Right now, cryptocurrency is still in the Wild, Wild West stage but this should not last as many can be abusing such a set-up for their own personal gains. We need regulations as long as they are not actually killing the goose that lays the golden eggs.

True, the government can get in the way sometimes. I'm hoping that they have a good advisor, or are at least open to knowledgeable persons giving advice. From what I've seen so far, most in the US government are for allowing cryptocurrencies to develop and grow. They seem to be going after those that are (or at least appear to be) scams. There are those in the government that are xenophobic towards cryptos as well. Thankfully, for now, they are a minority.

[darkangel11]

That’s a real problem because there’s a lack of education and knowledge on the part of many of the people who are actually doing the investing.

So what? Do the uneducated have less legal rights than the educated? It was a free country last time I checked and people were responsible for their actions regardless of what education or background they have. I know the government would like to limit the number of people involved in cryptos, but the reasons they're giving are plain stupid.
We already have the good old age restriction, now they're saying you have to be smart enough to be able to invest. Next they'll say you need to have a trading license, higher degree and enough money to start trading. Why is that? Because all people can't get rich. If it becomes easy for the slaves to make money they'll be more difficult to control.

[brontosaurus]

The US government, SEC and FINRA, are actually not being as heavy handed as they could be. They are also, in the same respect, not as knowledgeable as they could be in regards to putting out their rulings. Though they are trying to regulate moderately in an effort to stop the scammers from proliferating to US customers. Any company that wants to start and pander to US customers needs to have their ducks in a row before accepting US customers and be able to show they are above board. The SEC only got involved after the DAO hack anyway, which did fall loosely into their realm when it came to securities.

One thing for sure is that we could do away with the government and since the government is also playing a good role that can benefit all of us then I have no problem when these people are just doing their job. We need the government too implement regulations and laws with the aim of protecting innocent investors who can be exposed to scam artists as definitely scammers are now also partying in cryptocurrency. Right now, cryptocurrency is still in the Wild, Wild West stage but this should not last as many can be abusing such a set-up for their own personal gains. We need regulations as long as they are not actually killing the goose that lays the golden eggs.

We say that govt. must draft regulations for it. I do understand that such laws are great for the world of bitcoin but frankly speaking that the very boasted idea of P2P network is obviously under threat. P2P means its absolutely among two persons that how they choose and what they choose if we bring in this regulation then we are actually bringing a centralized system to cryptos too.

[baradfo]

The US government, SEC and FINRA, are actually not being as heavy handed as they could be. They are also, in the same respect, not as knowledgeable as they could be in regards to putting out their rulings. Though they are trying to regulate moderately in an effort to stop the scammers from proliferating to US customers. Any company that wants to start and pander to US customers needs to have their ducks in a row before accepting US customers and be able to show they are above board. The SEC only got involved after the DAO hack anyway, which did fall loosely into their realm when it came to securities.

One thing for sure is that we could do away with the government and since the government is also playing a good role that can benefit all of us then I have no problem when these people are just doing their job. We need the government too implement regulations and laws with the aim of protecting innocent investors who can be exposed to scam artists as definitely scammers are now also partying in cryptocurrency. Right now, cryptocurrency is still in the Wild, Wild West stage but this should not last as many can be abusing such a set-up for their own personal gains. We need regulations as long as they are not actually killing the goose that lays the golden eggs.

We say that govt. must draft regulations for it. I do understand that such laws are great for the world of bitcoin but frankly speaking that the very boasted idea of P2P network is obviously under threat. P2P means its absolutely among two persons that how they choose and what they choose if we bring in this regulation then we are actually bringing a centralized system to cryptos too.

I think the regulation should be more on the companies that are coming out with the ICOs versus individual persons. There are several scammers out there and for newbies not knowing how to spot the difference it would help some people if the governments went after them. Or at least the threat would keep a lot of scammers away. P2P should remain just that without government interference when it's between two individuals.