The chairman of the U.S. Securities and Exchange Commission (SEC) on Monday warned investors of the dangers of putting their money into cryptocurrencies, saying trading and public offerings in the emerging asset class may be in violation of federal securities law.
The statement by Jay Clayton came just hours after the U.S. securities watchdog stepped in to stop an initial coin offering (ICO) from a restaurant review app, after the company failed to register it as a security.
ICOs allow start-ups founded on cryptocurrency technologies such as blockchain to quickly raise capital by issuing virtual tokens to investors.
The action was significant because it showed SEC would step in to address ICOs for registration violations even if there were no claims of fraud, according to SEC officials.
“If an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost,” Mr. Clayton said in a statement.
