On January 14, the U.S. Securities and Exchange Commission issued another warning regarding initial exchange offerings (IEO).
According to the document, IEO resemble initial coin offerings (ICOs), many of which over the past few years the agency has considered as offers of unregistered securities. According to SEC representatives, although the parties conducting the IEO may claim that their sales are different from ICOs, they may still violate federal securities laws. Thus, the agency warned investors to be careful if they are considering investing in IEO.
“IEOs are being presented as a new trend in the ICO sector, as they are directly offered by trading platforms on behalf of companies (usually for a fee) to provide immediate trading opportunities for digital assets,” the document says.
The SEC highlighted the role of cryptocurrency exchanges, noting that they usually do not pass SEC registration and may incorrectly position themselves as exchanges.
The Commission warned that the platform claiming to be registered did not necessarily register with the SEC and stressed that there is no such thing as an SEC-approved IEO.
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