Digital tokens are now being incorporated into federal and state regulatory regimes. Over the past two weeks, the Securities and Exchange Commission (“SEC”) has suspended the trading of company securities of three publicly-traded blockchain-related companies The first company to be suspended was CIAO Group, Inc. (“CIAU”) due to questions regarding the accuracy of statements pertaining to its Initial Coin Offering (“ICO”) plans. On August 23rd, the SEC suspended Canadian company, First Bitcoin Capital Corp. (“BITCF”) based on concerns regarding the accuracy and adequacy of publicly available information about the company. American Security Resources Corp (“ARSC”) was suspended on August 28th due to questions about the reporting on the company’s transition to digital asset markets and its adoption of blockchain technology. Following these suspensions, the SEC released an Investor Alert that lists the factors the agency considers when evaluating a potential trading suspension. Moving forward, companies that intend to issue digital tokens through an ICO should ensure that such offerings are either clearly outside the scope of or fully compliant with the securities laws and regulations. Moreover, publicly-traded companies must make certain that their public disclosures regarding a token sale or other digital currency transactions are robust and not misleading.
For more information on the SEC Trading Suspension visit reedsmith.com.