Homepage / Technology / Crypto start-ups, concerned about a crackdown, have registered over $350m worth of ICOs with the SEC
Bond market flashing warning sign even as stocks rally to new highs Mohawk Tribe sues Microsoft, Amazon for patent infringement Bitcoin plunges nearly 9% on fears of greater oversight from US regulators US 10-year yield flashes possible warning: Dallas Fed's Kaplan Chinese fintech company Qudian spikes more than 40 percent in IPO 'The housing market can't take the shock of a natural event,' real estate economist warns The Apple Watch is finally taking off, says analyst By selling now, investors risk missing an additional 'melt-up' in the market Amazon's next big bet is letting you communicate without a smartphone, says Alexa's chief scientist Cramer: IBM is not a Warren Buffett story anymore but about 'reignition of earnings' IBM sees biggest jump in 8 years after earnings beat Rising seas threaten nearly $1 trillion worth of US homes, says Zillow Germany's Hochtief confirms $20 billion bid for Spain's Abertis Amazon's $13.7 billion bet on online grocery ordering hasn't convinced shoppers to stay home The same federal lawmakers who regulate Amazon are wooing the company in the race for HQ2 OPEC reportedly favors 9-month extension to output cut deal in bid to boost oil prices Stephen Curry’s new shoe will spark an Under Armour turnaround: Analyst Apple and GE are writing software to help detect when jet engines could fail Merck shares jump after Citi upgrade on stronger cancer drug sales US investors should get some international exposure Elon Musk is 'fixated on Mars' but Bezos and I want space to better Earth, says Richard Branson Hurricanes Harvey and Irma drive housing starts down to a one-year low When the revolution eats itself Stocks making the biggest moves premarket: CVX, MGM, ANTM, IBM, CREE, AMZN & more Hillary Clinton says US threats of war with North Korea are 'dangerous' and 'short-sighted' Twitter’s new user rules crack down on nudity and 'unwanted sexual advances' The only thing scary about the Dow is that nothing seems to scare it Economist lays out a ‘concerning’ trend for Apple stock 1 billion users could be using 5G by 2023 with China set to dominate, study says The big question for US cities: Is Amazon’s HQ2 worth the price? Google and Goldman Sachs are two of the most active investors in blockchain firms Iraq calls on BP to 'quickly' develop disputed oilfields after seizing areas of Kirkuk Amazon, eBay accused of ‘profiting’ from tax fraud in UK JPMorgan buys fintech start-up WePay WhatsApp is blocked in China and VPNs are being hit as the Communist Party Congress begins Xi Jinping makes big promises for China's economic future Akzo Nobel issues profit warning after third-quarter earnings miss Boeing says Bombardier jets could still face hefty duties even if they are assembled in Alabama European shares expected to open on a positive note as earnings season picks up the pace InterContinental is bringing two new hotel brands to Asia India's troubled banks desperately need more money — but government help just isn't coming An upcoming fintech IPO is set to be 2017's largest Chinese listing in the US Amazon has brought benefits—and disruption—to Seattle Mobileye: Without safety standards self-driving cars risk being an 'expensive science experiment' Chinese President Xi Jinping touts successes of socialism at Communist Party Congress Former Tesla factory workers allege racial harassment in new lawsuit Crypto venture firm Blockchain Capital is raising $150 million for two funds Asia markets to keep an eye on China's Party Congress as dollar firms Cramer Remix: The big problem that triggered Netflix’s decline A.I. company CEO: Big data is not a visualization problem, it's a human scale problem Cramer pushes back against 'peak earnings' theory with 4 cheap stocks This family bet it all on bitcoin IBM set to report earnings after the bell Magic Leap gets another $502 million in funding for its mysterious product Here are 4 top software stock ideas from Cowen Alphabet says Sidewalk Labs unit will build a model urban district in Toronto Don't doubt Elon Musk, says astronaut who spent a year in space Traders bet on obscure e-commerce stock in speculation over bitcoin's blockchain technology Billionaire Mark Cuban on running for President in 2020: ‘If I was single, I would do it. For sure’ Facebook executive Regina Dugan leaves experimental hardware group after 18 months Tech's 'winner take all' system is making valuations spike, says NYU professor Market-beating value investor Bill Nygren on why he's bullish on Netflix, General Electric Biggest risk to Netflix is a $7-per-month Amazon streaming service, analyst Mark Mahaney says Not every Wall Street analyst is gaga over Netflix Rally continues, but 'this is kind of how bull markets end,' Bank of America strategist says Fund managers bet on rising interest rates but not on tax-cut boost for stocks A track record of success: The 5 stocks that have crushed it year after year Tesla employees detail how they were fired, claim dismissals were not performance-related Volvo unveils Polestar 1 electric sports coupe, its bid to take on Tesla Why Google is terrified about Alexa, and what it's doing in response ChargePoint hires Uber EMEA policy chief as its top Europe exec Analyst says ‘nobody can compete’ with Tesla in China Microsoft's big new Windows 10 update rolls out today, here's what's new Cramer: Analysts wonder whether Netflix's strong growth can last Mexico's tech industry is booming as Trump's anti-immigration stance pushes workers abroad Economic optimism drives stockmarket highs Homebuilder confidence jumps to 6-month high in October GM's Cruise will test self-driving cars in New York in 2018 Google just unveiled its first custom smartphone chip that helps you take better pictures Netflix's Reed Hastings joins Forbes list of rich Americans for the first time This former Soviet nation plans to launch its own cryptocurrency Google is rolling out advanced Gmail security for government officials and journalists Wall Street gushes over Netflix, says it has reached ‘escape velocity’ Google Maps is discontinuing a feature that converted walking directions to calories Google's new Pixel phones are kind of boring and you can get more for your money elsewhere Microsoft is rolling out a bunch of new PCs, including a laptop with a charge that lasts 17 hours Goldman: Bet against GE, dividend cut is coming Garmin’s Speak puts Alexa-powered navigation in your car Trump may open US wallet for debt-ridden NATO ally Greece at urgent time Stocks making the biggest moves premarket: UNH, MS, JNJ, HOG, CMA, NFLX & more Trump's fortune drops to $3.1 billion, ties Snap's Evan Spiegel on new Forbes 400 rich list Goldman sees US-Iran tensions presenting long-term threat to global oil supply Bitcoin is a 'speculative bubble' and unlikely to become a real currency, UBS says More airlines are offering free Wi-Fi for messaging services Bad news for the bulls: There are now more bulls Boeing versus Bombardier: Here’s what happens next Morgan Stanley shares jump to 9-year high after earnings beat the Street on strong wealth management Theme park owner sees its shares tank after warning that terrorism is hitting profits Snap teams with NBCUniversal in drive for TV shows on Snapchat Hillary Clinton says she will 'not run again' for president but will continue to call out Trump

Technology

Crypto start-ups, concerned about a crackdown, have registered over $350m worth of ICOs with the SEC

Despite all the hype around initial coin offerings this year, U.S. regulators have yet to offer specific rules on what’s legal and what isn’t. So a growing number of crypto start-ups are taking compliance into their own hands.

Since early August, at least nine companies have filed token sales with the SEC to raise a total of more than $350 million, according to data compiled by CNBC. The latest was Unikrn, an e-sports betting company backed by celebrity investors including Mark Cuban and Ashton Kutcher. On Tuesday, Unirkn filed to raise $20 million through sales of its digital currency called Unikoingold.

ICOs, which hardly existed before this year, offer a new way for blockchain companies to raise cash without tapping traditional venture investors or the capital markets. Many projects have solicited funds directly from their website even though it may be years before they bring a product to market.

In late July, the SEC issued its first public warning on ICOs, indicating that securities laws may apply to the sale of new digital coins. The SEC later issued another warning about ICO scams and last month charged two companies for ICO fraud.

Even without a clear set of laws, companies are getting the hint.

“The idea is to be proactive and engage regulators to foster goodwill,” said Meltem Demirors, director at the Digital Currency Group in New York.

When registering token sales with the SEC, companies are using short Form D filings, the same type of document that start-ups use to disclose private venture rounds. They only provide basic information, like the name and contact information for principals and the industry group. In a section that asks what type of security is being offered, where a typical start-up would select “equity,” these companies are checking the “other” box and writing in something that includes the word token.

ICO filings with the SEC account for a small fraction of the more than $2.7 billion that’s been raised through token sales this year. There’s so much chaos in the global crypto market that the Chinese government banned all ICOs in September, classifying them as illegal ways to raise money. On Wednesday, Reuters reported that Russian authorities plan to regulate the market and will determine how by the end of the year.

Most of the projects going the SEC route are using a framework called the Simple Agreement for Future Tokens (SAFT), which was created by crypto start-up Protocol Labs and used for the first time in August. The agreement lays out how the tokens can eventually be used and provides for certain investor protections in case the project dissolves.

Unlike many ICOs, SAFTs are limited to accredited investors for people in the U.S., meaning ordinary retail investors can’t participate.

“The view people are starting to settle on is that a pre-sale of a tokenized service needs to be done as a sale of a security,” said Lowell Ness, a partner at law firm Perkins Coie and an expert in securities law. “They use the proceeds from that sale to go build the network. Once the network has been built and the token is fully functional and could be immediately used, then it’s OK to deliver the token to the world.”

For example, Kik Interactive’s new blockchain-based network was not yet up and running when the online chat company raised $50 million in August, so it sold SAFT securities to accredited investors and filed with the SEC.

The following month, once the service launched, Kik raised another $49 million without registering with the SEC. At that point, the digital tokens could be used as a utility on its service and no longer represented an investment, a company spokesman said. Kik users will be able to use Kin tokens for digital commerce on the network

Protocol Labs, the creator of SAFT, accounts for more than half of the money that’s been raised, pulling in over $200 million in August. The cash from the ICO is being used to build technology for a blockchain-based storage network called Filecoin.

There’s no guarantee that SAFT filings will be enough to satisfy the SEC in the future. But Digital Currency Group’s Demirors said they’re at least an indication that companies want better regulatory guidelines.

“These projects are attempting to demonstrate a desire to solicit input from regulators,” she said.

Engaging with the SEC won’t solve every concern around ICOs. The technology is still nascent and the business models are untested.

AngelList CEO Naval Ravikant, who’s been investing heavily in cryptocurrencies and helped come up with the idea for SAFT securities, expects to see plenty of highs and lows before the market settles. Here’s one of his tweets from last month:

Schwark Satyavolu, a partner at Trinity Ventures, agrees and said that some regulation is a good thing as it will knock out the shadiest digital currency start-ups.

“This will winnow the chaff from the grain and provide higher-quality deals with more information visibility,” he said.

Source: Tech CNBC
Crypto start-ups, concerned about a crackdown, have registered over 0m worth of ICOs with the SEC

Comments are closed.