The US Securities and Exchange Commission (SEC) have issued a warning to investors about illegitimate ICOs claims and other activities surrounding ICOs. Warnings are particularly focused on schemes like market manipulation through pump-and-dump pricing manipulation. It has also pointed out that some companies may simply be issuing ICOs in a simple bid to improve stock prices.
This warning comes in light of the recent trading suspension of shares of four companies by the SEC.
The Warning by SEC
On Monday, the Office of Investor Education and Advocacy of the SEC alerted investors about possible scams that involved stock of companies who claimed to be related to or stated that they are engaged in ICOs.
The four companies involved were publicly traded companies who claimed to offer exposure to these new and innovative technologies.
The SEC has warned that any company suspected of engaging in an ICO purely for the benefit of its own stock price risks outright suspension of trading of its shares on the market.
It outlined certain scenarios related to ICO issues that could lead to suspension of trading:
- Lack of adequate, accurate, incomplete or current information about the ICO operation
- Doubts surrounding the raison d’être of the ICO
- Trading volume manipulations
The 4 Recently Suspended Companies
The four companies under suspension are Sunshine Capital, Strategic Global, Ciao Group and First Bitcoin Capital Corp. They made ‘claims with regard to their investments in ICOs or publicised token/coin related news’.
This led to the suspension of trading in their shares.
Sunshine Capital Inc
This company’s shares were suspended from trading between April 12 and 26. Questions arose about Dibcoins, ‘the liquidity and value of Sunshine Capital’s assets’. The company went private a few days after its suspension.
Strategic Global Investments Inc
In July, Strategic Global revealed that it plans to sponsor more than 60 counter-party cryptocurrencies. They claimed at the time to be fully SEC-compliant. The first ICO, anticipated this fall, was the tokenised asset Troptions. But between August 4 and17, the SEC suspended trading. The U.S. Financial Industry Regulatory Authority (FINRA) has also become involved.
Ciao Group Inc
Ciao Group changed its name to Numelo Technology. An ICO was planned to be released later this year. But the SEC sprung into action, suspending the trading of its shares on OTC Markets between August 10 and 23. The specific details currently remain unclear.
First Bitcoin Capital Corp
First Bitcoin Capital Corp’s shares were suspended from trading after they rose almost 7000%. But in July, it announced that its subsidiary acquired tokens known as ‘the Internet of Money’.
Eventually, it traded under the symbol XOM. The company has said that it will permit a buyback at a set rate, two shares for one XOM token.