Nick Morgan, a former SEC Enforcement Division attorney, was a guest in the latest episode of the Epicenter podcast. Brian Fabian Crain and Sebastien Couture were the hosts of that podcast and they used the opportunity of having Nick Morgan as a guest to talk to him about the new regulations that the United States government is about to pass that are related to the Initial Coin Offerings or ICOs. Nick Morgan did not disappoint the audience as he had clear answers to the question which ICOs will be affected by the new regulations.
Morgan stated that the next SEC’s investigation will most likely be focused on the fraudulent activities conducted through the Initial Coin Offerings. However, he also said that the next SEC’s investigation will be limited to only fraudulent activities. SEC will also be conducting investigations of the digital currency exchanges and the non-fraudulent activities.
Morgan said that the new investigation will start by someone first gathering information about the ICOs. He says it is almost certain that SEC will start with the already familiar cases that involved fraud through the ICOs. The reason for that is the fact that SEC needs to be very careful not to take some action when there is no fraud. He stated that the clear example of the fraud involving initial coin offerings is when someone raises funds through ICOs but does not execute what was announced. Instead, the money is spent on something completely different.
ICOs are still an unregulated field and it is no wonder that there are many cases of fraud in this business. Because of that SEC is determined to investigate those cases and to impose new regulations that would prevent people from using ICOs for illegal activities. Morgan said that SEC would probably be driven by two factors in deciding which case to investigate and those two factors are how many victims were involved in that scheme and how big the violation actually was.
Investors who had the bad luck of being the victims of such frauds will be one source of information for SEC while whistleblowers will probably be the second source of information. Morgan has said that over the years, several big investigations have been conducted thanks to the information provided by the whistleblowers. The reason for more and more whistleblowers to appear is the fact that the authorities are offering a bounty for any information that could lead to solving a case.
In the end, Morgan said that he believes that SEC will take cautious actions when it comes to the investigations of Initial Coin Offerings as it is still a very unregulated field and they do not want to enable perpetrators to get away committing a crime. Because of that, Morgan expects that we will not be hearing about any actions until they have been successfully completed.
In the last couple of months, more and more governments from all over the world have expressed their worry about the ICOs and the possible fraudulent activities conducted through this platform. Because of that, many countries have decided to impose new regulations in this field and so far China has gone the furthest by banning Initial Coin Offerings completely. The big question is whether or not other countries in the world will follow China or they will take a slightly less harsh approach.
Thank You