SEC Co-Director Lashes Out At ICOs As Drive For Regulation Intensifies

A senior official at the U.S. Securities and Exchange Commission has lashed out at what he dubbed “malicious” ICOs, as the drive for greater regulation and oversight of initial coin offerings continues to gather pace.

In an aside delivered at a New York panel discussion, SEC co-director Steven Peiken likened some proponents of ICOs to “cockroaches,” while discussing the risks posed by ICOs to retail investors.

The comments come in the context of a ratcheting up of the focus on ICOs from regulators, both at the SEC and at equivalent regulators worldwide, following a recent spate of activity in the sector.

In off-the-cuff remarks made at the panel event, Peiken implied that those seeking to promote some of these ICOs were malicious in their intent, knowingly exploiting non-savvy investors by bypassing traditional forms of investment securities.

“As with any kind of newsworthy event, roaches kind of crawl out of the woodwork and try to scam money off of investors.”

ICOs have been attracting attention from regulators for all the wrong reasons, having raised several billion over the last few months for companies issuing their own cryptocurrencies.

The SEC recently declared that some ICOs could be securities, although it stopped short of issuing a blanket decree, instead preferring to judge each case on its merits. Similar steps have been taken by regulators in Hong Kong, Canada and most notably China, where ICOs were effectively and swiftly banned, in the most decisive policy approach to the matter yet.

The comments support claims that the SEC is already investigating several ICOs, with a view to weeding out so-called “bad actors” in the sector. The responsibility for handling these investigations has been passed to the commission’s dedicated blockchain technology group, which was formed in 2013 to observe developments around the technology.

Several allegedly fraudulent ICOs are already thought to be under investigation by the SEC, including several proposed offerings that were stopped short in their tracks. In particular, the SEC is thought to be devoting its attention to public companies developing ICOs, in preference to following more traditional channels of raising capital.

While it remains unclear whether Peiken intended to link ICO issuers to cockroaches, the sentiment from the SEC remains clear, with further oversight of the sector now seeming increasingly inevitable.