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Screenshot of a breaking news alert e-mail from Q2 2017
The Chairman of the U.S. Securities and Exchange Commission (SEC), Jay Clayton, came with a statement that the SEC is now investigating companies that benefited from the crypto hype by becoming “blockchain” ones overnight. It wasn’t long ago when certain US companies experienced a strong stock price increase by just adding the word “blockchain” to its corporate name.
Now, amidst the crypto “bloodbath”, with almost all alt coins plunging and the total market capitalization of the entire cryptocurrency market at just around $550 billion, the SEC has turned its eye on those overnight blockchain “heroes”.
How these companies managed to increase their stock price and market positioning is by announcing their intent to enter the blockchain hype or by intending to invest in cryptocurrency technology.
The Reuters just reported:
“In December, the SEC temporarily suspended trading in the shares of Crypto Company (CRCW.PK), a small firm that saw its stock rise more than 2,700 percent after signing a deal to buy a cryptocurrency data platform.”
The Chairman of SEC, Jay Clayton, explained that in this volatile crypto market, no company can benefit from the digital currency hype by just saying that they “intend” to enter the blockchain game without acknowledging the risks associated with such statements and intentions. A company that does not have a track record that proves its blockchain “expertise” cannot simply see its stock price triple just because the times are good for cryptos and everyone is going along with the hype and taking advantage of the boom.
“The SEC is looking closely at the disclosures of public companies that shift their business models to capitalize on the perceived promise of distributed ledger technology and whether the disclosures comply with the securities laws, particularly in the case of an offering.”
Clayton also commented on the ICOs’ rise. The idea of raising funds through offering tokens is still not regulated and the SEC has put ICOs on its “alert” list and are now closely viewing what is going on with ICOs, as well.