When the SEC whispers, Ethereum trembles. When the SEC shouts…
Crypto markets continued to plunge, shortly after the start of a government crackdown on what has been described as the financial Wild West… Initial Coin Offerings. Ethereum (ETH) has reached an all-year low of $155, plunging 37% over the course of the past seven days. But those losses were positively bullish compared to the galaxy of ERC-20 tokens, many of which suffered double-digit losses within the past 24 hours.
The freefall appears to be related to last Friday’s announcement of regulatory settlements from two non-compliant ICOs. Airfox (AIR) and Paragon (PRG) both agreed to refund their investors, register their tokens as securities, and pay penalties to the Securities and Exchange Commission.
This was the first securities enforcement against US-based token sales. Although the SEC has previously pursued actions against fraudulent sales, and stopped at least one ICO in its tracks, Friday was the first penalty for ICOs that failed to register their tokens or claim exemptions.
But there’s no indication that regulators plan to stop at a warning, and that may be the cause for the market-wide tremors. As some observers have remarked, the Airfox and Paragon orders are nearly identical, and large sections of the texts are copied word-for-word —suggesting that US regulators may be preparing for a “cookie cutter” approach to enforcing securities laws against ICOs.