SEC is now charging fraudulent ICO activities

The hype around the bitcoins and other cryptocurrencies has subsequently given an even larger popularity to the Initial Coin Offerings. As we know, ICOs are a great way for the early stage companies to raise their starting capital. It is also a great method for the investors to hop on the train before regular investment companies do. Even though some larger companies, like KIK, have gone an ICO way, the hype around ICOs have given birth to quite many scams and frauds. While there are many ICO rating sites that try to assess the potential risks and alert the potential investors, frauds still find their way.

Last week, SEC, Securities and Exchange Commission, has charged two companies that just recently flipped an ICO with fraudulent activities. Both of these companies actually belong to a single person – Maksim Zaslavskiy. The first company, REcoin, was claiming to offer investors a great way to fund real estate – via cryptocurrencies. Another company, DRC World, was aiming at providing crypto investors with a new way to allocate their funds in the diamonds. According to SEC, it has obtained an emergency case order which allows to freeze the company and personal assets of Maksim Zaslavskiy.

This is the first time the US government has interfered with questionable ICOs and it is quite obvious that its actions were severe. Until now, ICOs have been raising quite many doubts in the investment world as they simply came with a very shady nature and allow the companies to get the funds into their ownership without any strings attached. Besides that, ICOs and all of the cryptocurrency-related products are keeping a very large degree of anonymity, hence, the potentials for frauds was even higher as the likelihood of penalties was very low.

Even though many companies have looked at ICOs are a cheaper and faster way to raise the capital, others quickly understood that it is actually possible to make lots of income simply by launching ICOs and attracting the investments. The good thing is that now we see more regulation going the ICOs’ way and this should result in a better reputation of these types of funding and cryptocurrencies as a whole. The current action of Securities and Exchange Commission is the first time, but we are sure it is not the last.