Difference between revisions of "Cryptocurrency fraud"

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The most common securities law violations that the SEC warns about with ICOs and digital currencies are:
The most common securities law violations that the SEC warns about with ICOs and digital currencies are:
# Theft and misuse of investor funds;
# Theft and misuse of investor funds;
# A failure to register the coins/tokens as securities, e.g., SEC v. Kik Interactive, Inc.;
# A [https://www.bloomberg.com/news/articles/2017-09-15/sec-said-to-monitor-digital-coin-sales-as-market-tops-2-billion failure to register] the coins/tokens as securities, e.g., [https://www.sec.gov/news/press-release/2019-87 SEC v. Kik Interactive, Inc.];
# Market manipulation schemes, such as pump-and-dump virtual currency schemes;
# Market manipulation schemes, such as [https://www.cftc.gov/PressRoom/PressReleases/7697-18 pump-and-dump virtual currency schemes];
# A failure to maintain adequate internal controls; and
# A failure to maintain adequate internal controls; and
# A failure to disclose risks associated with these investments.
# A failure to disclose risks associated with these investments.


The digital asset market is growing exponentially and there no sign that it will slow down soon. As such, the SEC Office of Compliance Inspections and Examinations listed “Cryptocurrency, Initial Coin Offerings, Secondary Market Trading, and Blockchain” as examination priorities for 2018 and 2019.  The SEC indicates that its areas of focus will include:
The digital asset market is growing exponentially and there no sign that it will slow down soon. As such, the SEC Office of Compliance Inspections and Examinations listed “Cryptocurrency, Initial Coin Offerings, Secondary Market Trading, and Blockchain” as [https://www.sec.gov/about/offices/ocie/national-examination-program-priorities-2018.pdf examination priorities for 2018] and [https://www.sec.gov/files/OCIE%202019%20Priorities.pdf 2019].  The SEC indicates that its areas of focus will include:
* Whether financial professionals maintain adequate controls and safeguards to protect these assets from theft or misappropriation; and
* Whether financial professionals maintain adequate controls and safeguards to protect these assets from theft or misappropriation; and
* Whether financial professionals are providing investors with disclosure about the risks associated with these investments, including the risk of investment losses, liquidity risks, price volatility, and potential fraud.
* Whether financial professionals are providing investors with disclosure about the risks associated with these investments, including the risk of investment losses, liquidity risks, price volatility, and potential fraud.