The SEC took two additional steps today in its regulation and oversight of the initial coin offering (“ICO”) and cryptocurrency markets.

In the SEC’s latest action targeting an ICO, the SEC Enforcement Division’s new Cyber Unit intervened in an attempted ICO by Munchee, Inc., an online food review service with plans to build out its network on blockchain.  In its cease-and-desist order, the SEC found that the tokens offered by Munchee were securities, and that Munchee violated Section 5 of the Securities Act by not registering the offer and sale of the tokens. According to the order, after being contacted by the SEC, Munchee halted the offering and refunded investor proceeds. For more information, see the Order or the SEC’s related Press Release.

Also on Monday, SEC Chairman Jay Clayton released a public statement on cryptocurrencies and ICOs, providing additional views on the cryptocurrency and ICO markets. Mr. Clayton urged Main Street investors to ask questions and demand clear answers prior to investing in ICOs or cryptocurrencies, and provided a list of sample questions for investors considering an investment in these markets. Mr. Clayton addressed again the issue of when digital tokens or coins are “securities,” and also addressed the question as to whether all digital assets labeled as “cryptocurrencies” are beyond the SEC’s jurisdiction.  The full statement can be read here.

Photo of Louis Rambo Louis Rambo

Louis Rambo is a partner in the Corporate Department and a member of the Capital Markets Group. He focuses his practice on counseling public companies and their boards of directors on corporate governance, capital markets transactions, mergers and acquisitions, securities regulation, disclosure and…

Louis Rambo is a partner in the Corporate Department and a member of the Capital Markets Group. He focuses his practice on counseling public companies and their boards of directors on corporate governance, capital markets transactions, mergers and acquisitions, securities regulation, disclosure and shareholder activism. Drawing on his previous tenure with the Securities and Exchange Commission in the Division of Corporation Finance, Louis partners with clients on capital raising, including underwritten equity transactions, at-the-market offerings and high-yield and investment grade debt offerings, as well as on structuring M&A transactions, spin-offs, tender offers and going private transactions. He advises public companies on developing governance and disclosure matters, including director independence, compensation, insider trading issues, shareholder proposals and stockholder meetings, and advises on shareholder activism and takeover defense.

Louis also regularly advises hedge funds, private equity funds, family offices, private companies and other financial institutions on a wide range of transactional and securities regulatory compliance matters, including capital raising, PIPEs and secondary transactions, novel and complex beneficial ownership issues arising under the federal securities laws, derivative transactions, insider trading issues and policies and compliance programs.

Louis previously served as an attorney with the SEC in the Division of Corporation Finance. While at the SEC, Louis worked on a number of transactional and securities compliance matters.