By Tim Fries at The Tokenist
According to the U.S. Securities and Exchange Commission’s (SEC) Annual Report for the fiscal year 2019, more than $4.3 billion were collected due to disgorgement and penalties. Out of the funds collected, approximately $1.2 billion were returned to harmed investors.
The SEC’s 2019 Annual Report Explained
2019 was a busy year for the SEC. The commission led a total of 862 enforcement actions, of which 526 constituted standalone actions.
The cases covered a wide array of categories, including issuer disclosure, accounting violations, auditor misconduct, investment advisory issues, securities offerings, market manipulation, insider trading, and broker-dealer misconduct.
A large number of Initial Coin Offering (ICO)-related cases made significant headlines throughout the year.
Throughout the year, several blockchain-based companies which previously leveraged the ICO as a fundraising mechanism settled with the SEC. The majority of charges included unregistered securities offerings.
In September for example, the SEC announced a settlement with Block.one, where Block.one agreed to pay a $24 million civil penalty. Charges originally stemmed from a 2017-2018 ICO which raised more than $4 billion.
SEC Chairman Jay Clayton has publicly said on multiple occasions that virtually every ICO he has seen— minus Ethereum— constitutes a securities offering. Yet hardly any ICOs followed the respective securities laws and regulations.
As a result, the blockchain space has seen a transition from the ICO to the Security Token Offering (STO).
Out of a concern for regulatory compliance, companies are leaving the ICO behind, and turning to the STO as a viable alternative to raise funds.