Today, December 27, 2017, the Securities and Exchange Commission Office of Investor Education and Advocacy released the top 10 investor bulletins for the year.
The bulletins are sent out by the SEC on a periodical basis as the need arises, with the goal of providing resources and informational tools to individual investors. Cryptocurrency was prevalent among the topics covered, and the number one bulletin discussed token offerings, or ICO crowdfunding. It stated that token offerings "may provide fair and lawful investment opportunities" but also warned, "New technologies and financial products, such as those associated with ICOs, can be used improperly to entice investors with the promise of high returns in a new investment space."
"Investors should be aware about potential scams involving companies claiming to be related to ICOs. These frauds can include "pump-and-dump" and market manipulation schemes involving publicly traded companies that claim to provide exposure to this new investment space. The SEC issued several trading suspensions on the common stock of certain issuers who made claims regarding their investments in ICOs or touted coin/token related news."
The commission went on to warn about celebrity endorsements, the likes of which have become something of a spectacle in the blockchain ecosystem. Look no further than those of Paris Hilton, Floyd Mayweather, and Wu-Tang Clan, all of whom have backed various projects. According to the SEC, "a celebrity endorsement does not mean that an investment is legitimate or that it is appropriate for all investors." The SEC maintained that affirmation from a famous person is not a valid basis for deciding to back a financial product with capital.
The bulletins published by the SEC are not meant to be a legal interpretation of the agency's policy, but rather as guidance for investors. It is recommended that individuals with questions regarding the application of a law consult with an attorney specializing in securities or tax law.