Eighty Cryptocurrency Companies Under Subpoena by SEC as Investigation Broadens
The U.S. Securities and Exchange Commission (SEC) has issued subpoenas to 80 cryptocurrency firms as part of a broad inquiry into the digital asset market, according to CNBC. One of the biggest names summoned for questioning is Michael Arrington, who last year launched a $100 million cryptocurrency fund.
CNBC learned of the far-reaching nature of the investigation in a telephone interview with Arrington, who indicated that he and every cryptofund he knows is under investigation. Hacked reported last week that Overstock has also been issued a subpoena, according to a Dec. 18 filing with the SEC. Overstock is the parent company of the $250 million tZERO token offering.
Arrington also said that regulators aren’t exactly sure what they are looking for, adding that the market is “begging them” for rules.
The TechCrunch founder launched his investment fund, Arrington XRP Capital, last fall. The fund uses Ripple’s XRP tokens to pay everything from distributions to salaries. According to the official website, “Arrington XRP Capital is a digital asset management firm in blockchain-based capital markets.”
Regulatory Concerns Blown Out of Proportion
It is the author’s view that the regulatory FUD surrounding the cryptocurrency market has been blown out of proportion in recent months. Aside from minor regulatory changes in South Korea, the market is practically the same today as it was in early January when cryptocurrencies were valued at more than $830 billion. With respect to the latest investigation, the SEC has not yet ruled that anyone is in violation of the law.
How the United States decides to regulate cryptos could have a ripple effect on market participants worldwide. However, there is nothing to suggest that any forthcoming legislation would reduce the accessibility of digital assets. On the topic of the SEC, the main item of contention has been initial coin offerings (ICOs) and whether they satisfy the criteria for federal securities laws. Although token issuers do not want their projects labelled as securities, this designation wouldn’t be the end of the world – it would simply mean the digital asset must follow existing rules and regulations.
All this isn’t to say that regulation shouldn’t be a top concern (after all, the SEC and others are still trying to figure out what they want). Market participants simply need to pay attention to what the major regulatory agencies have to say without feeding into fear, uncertainty and doubt. In the case of the SEC’s investigation, the jury is still out.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
Featured image courtesy of Shutterstock.