It seems authorities are no longer content to let the crypto industry regulate itself. They are becoming more involved. This increased involvement reflects growing ICO regulation by the SEC. Two cryptocurrency firms were ordered by the United States Securities and Exchange Commission (SEC) to return funds raised during their initial coin offerings (ICO) to investors. The reason? The companies failed to register their ICOs with federal regulators.

The companies – CarrierEQ and Paragon Coin – reached a settlement deal with the SEC. They were each fined $250,000. As part of the deal, the companies will return money to investors. They also must file financial statements and other documents. These will give prospective investors insight into the health of the business. This action is the first of its kind in ICO history.

Stephanie Avakian, co-director of the SEC Enforcement Division, said, “We have made it clear that companies issuing securities through ICOs must comply with existing registration laws.” She added a warning: “These cases show we continue to monitor for violations of federal securities laws regarding digital assets.”

Blockchain ICOs under SEC review

CarrierEQ, also known as Airfox, offers its services in emerging markets. In October 2017, the company raised $15 million in its ICO. On the other hand, Paragon is a company using blockchain technology to “manage supply chain tracking for the marijuana industry.” The company raised $12 million in an ICO held in August.

It is pertinent to note that the SEC did not accuse the companies of engaging in any fraudulent activities. In addition, the companies themselves neither denied nor admitted to the findings of the SEC as contained in the settlement. The SEC discovered that the tokens issued by the companies should have been registered as either securities or investments that would have given investors returns if they become profitable.

In summary

The US Securities and Exchange Commission has come down hard on two cryptocurrency companies for failing to register their ICOs with federal regulators. This move highlights the increasing ICO regulation by SEC in the crypto industry. The firms, which reached a settlement deal with the SEC, were also fined $250,000 each. In addition, the SEC ordered the cryptocurrency companies to return all funds gotten from the ICOs to investors. This would be the first time that such a groundbreaking action has been taken by regulators in the wild crypto terrain.

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