Managers of several Cryptocurrencies that are focused on hedge funds have been summoned to appear before the US security and exchange commission to answer to complaints that have been lodged against them. The ICOs, Cryptocurrency hedge funds are snowballing in the U.S. over the last 12 months, and the business investment flourishes daily attracting more clients. Allegedly, American regulators want to control the sector to ensure funds don’t go to the fields they disapprove of because of its similarity with initial coin offering. The regulatory agency exists to ensure healthy business and weed out frauds and unlawful business activities.
SEC Wing of Implementation
The US enforcement agency on security exchange recently requested information from some Cryptocurrency hedge fund companies. It also sent some subpoenas to hedge fund a few days back. Three anonymous sources who requested their identity to be concealed told Bloomberg that the regulators wanted to be briefed on how funds priced investments in Cryptocurrency and about their compliance to requirements to ensure clients finances are well protected from fraud.
The SEC office of compliance, inspection, and examination issued some of the information as requested, which can refer its findings to the agency’s enforcement unit in case of any misconducts and discrepancies in the information issued. SEC enforcement division has already issued subpoenas to some crypto hedge funds to prove evidence against them. The Initial coin offering company can be penalized if found to have gone against the regulations and SEC rules. Peter van Valkenburgh, director of research at Coin Center, a Washington based advocacy group, mentioned that SEC is seeking to oversee all the issues concerning ICO from a diverse perspective, for all players in the field.
SEC Scrutiny On Hedge Fund
The SEC further demanded more details to know if the hedge fund company has properly and correctly disclosed and provided any potential conflict of interest. Especially among the top-level managers who for example, have personal holdings in the initial coin offerings (ICOs). Amongst the subpoenas issued to the hedge fund at least one was specifically on ICO Investment Company. In another case, the investing banks were interrogated vastly on their dealings in the market on token sales to consumers and prospectus.
The SEC was also deeply concerned about companies in the sector employing simple agreements for future tokens to evade rules and regulations on ICO. SAFTS are the new ways of venturing into ICO. The SEC believes SAFTS provides a platform for companies in that business environment to evade regulations.
ICO has attracted the eye of regulators in the recent past; the SEC interest in the crypto hedge fund company seems to have been greatly blamed on ICO may be because of its similar structure with hedge fund corporations. Several subpoenas have been issued by the regulators against the companies in the field in the past few weeks because of their dealings that in the view of SEC contravene its regulations. The SEC quest is to unravel evidence of digital currency securities fraud and protect consumers and businessmen and women according to the US federal laws.
Is the SEC trying to scare away hedge fund from venturing into Bitcoin business with its new threats with subpoenas and summons on the management? Share your valued opinion below on these new happenings.