The SEC has started sending out subpoenas to initial coin offerings. In some cases, state attorney generals are joining forces and starting concurrent investigations into ICO’s. It’s hard to know whether this is part of a sweep of the industry, or focused on specific types of token sales. What’s clear though, is that if you’re an early stage ICO, or a startup leveraging an ICO, you will need to respond to the subpoena. At times like this, having an attorney can advantageous.
The SEC subpoena’s, part of the agency’s probe into the crypto fundraising mechanism of using ICO’s is definitely picking up speed. The documents sent by the SEC are very detailed, and focus heavily on almost everything related to the token launch typically. Complying with these subpoenas is a tall order for startups, can be draining. Handling the subpoena on your own can be lethal to your project – especially if you don’t accurately communicate.
Due to the fact these subpoenas are “new,” much is still unknown. The SEC can ask for things such as a list of investors, marketing materials, your organizational structure, the overall amount raises, where the funds are, the people involved in your business, and other relevant information. It’s possible the SEC could reach out to your advisors as well, for more information as a part of their investigation process. While it’s possible the subpoenas are just to act as a “scare,” tactic – to reduce the chances of unsavory players – it doesn’t change the fact you are at risk after receiving one.
It’s possible the SEC is investigating ICO’s where investors received a token which doesn’t have any use yet, or because the blockchain network for the token has not yet been built.
If you receive a subpoena, we recommend speaking to an attorney and interfacing with the SEC through the attorney you hire. The Spodek Law Group can help act as an intermediary, and represent you.
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