If the crypto market’s down turn was bad before, it’s only gotten worse with the past week and a half’s flurry of legal action taken by the SEC. There has been finger-pointing galore for ICOs and their legal teams that have not been accountable for their actions that potentially constituted fraud and insider trading.
Where Did It All Go Wrong?
There has been a lot of speculation what exactly caused the SEC to snap into action. Their seemingly lax attitude appears to have been an attempt to lull ICO teams into sharing their most intimate details only to snapback on them. All of the hearings in support of crypto directly contradict their harsh steps to reel back in the Wild West/ a grey area that is the ICO market.
Some traders are taking this opportunity to lawyer up. The insider trading allegations stem from the unfair bonuses that are delegated to insiders and affiliates of ICOs, creating an opportunity for quick flips that ultimately harm the market long term.
So, What Could Be Going On?
It gets worse. The SEC has ruled that any platform that allows the exchange of cryptocurrencies considered securities that aren’t registered with them is unlawful. This language is interesting for two reasons. First, it is loose, so it means they can go after whoever and whatever they declare an online platform.
Their solution to not understanding or knowing how to navigate the cryptocurrency market is to try and cast a big net over it. This is interesting because many ICOs have already been banning US investors from taking part directly.
The key word is direct. The SEC is aware of the get around and loopholes, and they are attempting to close those opportunities by making it difficult to impossible to get the initial crypto required.
Sites that offer local p2p crypto exchanges are some of the last setups for discreetly buying the bigger coins such as ETH, ETC, LTC, BTC, and more. As the United States agencies attempt to reel in unlicensed buying and selling, it’s sure to dissuade the casual buyer from participating.
The entire point of trajectory for the crypto community has been to integrating cryptocurrency as a mainstream inclusion. With major exchanges being bought by banks, ICOs being limited, and the government shutting down whomever they can, it’s looking less and less possible.
Who Is On The Chopping Block
Just to condense it, there are a lot of hands and heads on the chopping block right now. Advisors who benefited from substantial discounts despite not providing any direct company benefit are being subpoenaed as well. Lawyers and teams that attempted to manipulate or directly contradict policies the SEC had mentioned are also to blame. Lawyers being used as a scapegoat could become a massive part of how ICOs will handle indictments.
Anyone that has participated in ICO pools promoted one or ran one is also an opportune target. It’s not as much about who did damage, or even who benefited. It appears to be a measure done to curtail willingness to get involved in ICOs. It’s an attempt to force fear and make an example out of whoever they can. Even if indictments won’t stick, it’s enough to put the fear of God into anyone thinking of launching an ICO in the current market.
Between the terrible debut prices, the dumping, and the legal problems it just wouldn’t be worth it. For that reason, the SEC has made its mark. It’s taken an ICO winter and between their efforts and China’s may pull everything to a screeching halt.
Only time will tell.