On January 19, 2018, Securities and Exchange Commission (SEC) co-enforcement directors Stephanie Avakian and Steven Peikin as well as Commodity Futures Trading Commission (CFTC) enforcement director James McDonald issued a joint statement on virtual currency enforcement actions:
"When market participants engage in fraud under the guise of offering digital instruments – whether characterized as virtual currencies, coins, tokens, or the like – the SEC and the CFTC will look beyond form, examine the substance of the activity and prosecute violations of the federal securities and commodities laws. The Divisions of Enforcement for the SEC and CFTC will continue to address violations and bring actions to stop and prevent fraud in the offer and sale of digital instruments."
Both agencies are due to testify on cryptocurrency before the Senate Banking Committee next month.
This morning, the CFTC announced that it brought lawsuits against multiple virtual currency operators. The agency alleged that the defendants defrauded investors and violated other regulations. In the last month, the CFTC allowed bitcoin derivatives to come to market but later announced that it would examine the self-certification process.
The first bitcoin derivatives, offered by the Chicago Board Options Exchange, settled on Wednesday at a price of $10,900. In the preceding weeks, some market watchers and former regulators expressed dismay at the decision to allow the financial product. There were even concerns about potential market manipulation.
The SEC most recently allowed the listing of blockchain-related exchange-traded funds (ETFs), but not before the firms removed the term "blockchain" from the names of the ETFs. In the last few weeks, the agency has instituted trading halts on a variety of companies, including UBI BlockChain Internet and The Crypto Company. The SEC also instituted a cease-and-desist against Munchee, a food-delivery company undertaking an ICO (token offering). Last month, SEC chairman Jay Clayton shared his views on cryptocurrency and token offerings in a public statement.