{"id":686,"date":"2017-11-30T13:24:23","date_gmt":"2017-11-30T18:24:23","guid":{"rendered":"https:\/\/www.silvermillerlaw.com\/?p=686"},"modified":"2024-04-17T20:35:58","modified_gmt":"2024-04-17T20:35:58","slug":"former-sec-commissioner-harshly-criticizes-initial-coin-offerings","status":"publish","type":"news_posts","link":"https:\/\/www.silvermillerlaw.com\/press\/in-the-news\/former-sec-commissioner-harshly-criticizes-initial-coin-offerings\/","title":{"rendered":"FORMER SEC COMMISSIONER HARSHLY CRITICIZES INITIAL COIN OFFERINGS"},"content":{"rendered":"<p>Earlier this week, Joseph Grundfest &#8212; a former Commissioner with the U.S. Securities and Exchange Commission (SEC) &#8212; spoke loudly and critically against the wildly-popular fundraising mechanism known as an <a href=\"https:\/\/www.silvermillerlaw.com\/current-investigations\/initial-coinofferings-ico-compliance\/\"><u>Initial Coin Offering (ICO)<\/u><\/a>. While questioning why the SEC has not been more forceful in investigating ICOs for the harm they can cause investors, Mr. Grundfest told <em>The New York Times<\/em>: \u201cICOs represent the most pervasive, open and notorious violation of federal securities laws since the Code of Hammurabi. It\u2019s more than the extent of the violation. It\u2019s the almost-comedic quality of the violation.\u201d His position echoes and supports the allegations in Silver Miller\u2019s recently-filed class action lawsuit against <u>Tezos in connection with Tezos\u2019 July 2017 ICO that garnered from investors assets now valued at more than $800 million.<\/u><\/p>\n<p>Over the past year, ICOs have become increasingly successful and widely-used as a fundraising tool for start-up companies that purport to be developing a new technology, blockchain, or distributed ledger database aimed at replacing older, less secure, and less reliable systems. While in traditional Initial Public Offerings (IPOs), a start-up company offers its investors company stock in exchange for investment capital; the ICO companies offer something different to their investors:<a href=\"https:\/\/www.silvermillerlaw.com\/practice-areas\/digital-investments-cryptocurrency\/\"> <u>cryptocurrency<\/u><\/a> issued or managed by the start-up company in exchange for the investors\u2019 capital, which itself is usually pre-existing cryptocurrency such as bitcoin or Ether owned by the investors. Much like capital stock, the value of each start-up company\u2019s newly-created cryptocurrency can rise or fall with the success or failure of the start-up venture.<\/p>\n<p>Mr. Grundfest\u2019s concern &#8212; and the concern of many other like-minded critics of ICOs &#8212; is that the entrepreneurs promoting ICOs, and the newly-created digital currencies being offered as part of their promotions, are not being regulated by the SEC or any other governmental organization, even though what is being offered appears to fall directly within federal securities laws and the jurisdiction of governmental regulation. Speaking at the National Press Club in Washington, D.C. earlier in November 2017, Silver Miller founder David Silver offered similar thoughts and told the audience of cryptocurrency entrepreneurs and attorneys that the regulatory agencies will not care what companies call their offerings; they will only care what the companies are actually offering.<\/p>\n<p>Mr. Grundfest and Mr. Silver agree that almost all ICO investors were investing not because of some future use of the computer networks purportedly being built; rather, those investors were buying-in to the start-up ventures because they were anticipating the value of the newly-created digital coins they were being given in exchange for their funds would rise in value &#8212; a classic component of an investment, and precisely the type of thing that governmental bodies such as the SEC are in place to regulate.\u00a0\u00a0 While some of the companies will be successful, some will not. \u201cIs this amazing technology? Yes,\u201d Mr. Grundfest said. \u201cBut most of the stuff we see today is total crap.\u201d<\/p>\n<p>Silver Miller currently represents the victims in class\/group action lawsuits against multiple cryptocurrency exchanges (Cryptsy and Kraken) and recently filed the nation\u2019s first federal court class action lawsuit against <a href=\"https:\/\/www.silvermillerlaw.com\/wp-content\/uploads\/2017\/11\/2017-11-13-DE-1-CLASS-ACTION-COMPLAINT.pdf\"><u>Tezos<\/u><\/a> for potential regulatory violations and misrepresented solicitations in connection with Tezos\u2019 ICO. We also represent clients investigating numerous other ICOs for similar regulatory violations and misrepresented crypto-investment offerings. If you have invested in an ICO and are concerned that your investment is in jeopardy or that you have been defrauded, contact Silver Miller <a href=\"https:\/\/www.silvermillerlaw.com\/contact-us\/\"><u>contact us<\/u><\/a> for a no-cost, no-obligation consultation to discuss your legal rights.<\/p>\n<p style=\"text-align: center;\">See <em>The<\/em> <em>New York Times<\/em> article:<\/p>\n<p style=\"text-align: center;\"><a href=\"https:\/\/www.nytimes.com\/2017\/11\/26\/business\/initial-coin-offering-critic.html\"><u>Initial Coin Offerings Horrify a Former S.E.C. Regulator<\/u><\/a><\/p>\n","protected":false},"featured_media":1859,"template":"","meta":{"_acf_changed":false,"_links_to":"","_links_to_target":""},"news_categories":[10],"class_list":["post-686","news_posts","type-news_posts","status-publish","has-post-thumbnail","hentry","news_categories-uncategorized"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>FORMER SEC COMMISSIONER HARSHLY CRITICIZES INITIAL COIN OFFERINGS - SilverMillerLaw.com<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.silvermillerlaw.com\/press\/in-the-news\/former-sec-commissioner-harshly-criticizes-initial-coin-offerings\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FORMER SEC COMMISSIONER HARSHLY CRITICIZES INITIAL COIN OFFERINGS - SilverMillerLaw.com\" \/>\n<meta property=\"og:description\" content=\"Earlier this week, Joseph Grundfest &#8212; a former Commissioner with the U.S. Securities and Exchange Commission (SEC) &#8212; spoke loudly and critically against the wildly-popular fundraising mechanism known as an Initial Coin Offering (ICO). 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