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29 March 2020

SEC Issues Alert Against Initial Exchange Offerings - Bitcoin News

SEC Issues Alert Against Initial Exchange Offerings - Bitcoin News

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Securities and Exchange Commission’s Office of Investor Education and Advocacy has urged investors to use caution before investing in initial exchange offerings.

The alert explains that IEOs are similar to initial coin offerings in that they are offerings of digital assets to raise capital, but touted as an innovation over ICOs because they are offered directly by trading platforms.

“Claims of new technologies and financial products, such as those associated with digital asset offerings, and claims that IEOs are vetted by trading platforms, can be used improperly to entice investors with the false promise of high returns in a new investment space.

If the IEO involves securities, the online trading platform on which it is being offered may need to register with the SEC as a national securities exchange or an alternative trading system (ATS) to legally operate in the United States.

“It is a red flag if the IEO and its participants, including the online trading platform, do not address or discuss the applicability of the federal securities laws,” the alert claims.

“In addition, be careful if the promoter of the IEO or the digital trading platform hosting the IEO states that they are approved or registered with the SEC.

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