SEC Subpoenas TechCrunch Founder’s $100 million Crypto Fund
Michael Arrington, founder of TechCrunch, a blog site focused on the latest technological developments worldwide, has been subpoenaed by the U.S. Securities & Exchange Commission (SEC). The subpoena, which has called into question the tech entrepreneur’s $100 million crypto fund, appears to be linked to a wider probe into the business practices of the crypto-market in general.
It seems that Arrington was actually supportive of SEC’s actions. That’s because, through a phone interview with CNBC, Arrington said,
“We received a subpoena. Every [crypto]fund I’ve talked to has received one. That’s fine. They just have to figure out what they want. They need to set up rules so we can all follow them, and the market is begging them for that.”
So far, the SEC has declared that all ICOs are basically securities. Therefore, they need to be registered as such. Failure to do so could result in legal penalties, according to the federal regulator.
Lack Of Clarity About Cryptocurrency Regulations
Notably, the SEC has put in a significant amount of effort into researching and investigating the digital currencies market and technology. However, since this nascent technology is still in its infancy, the U.S. regulator is just beginning to learn about it, along with the rest of the world. That’s why there is still a lot of ambiguity as far the exact rules and regulations pertaining to various types of business activity involving cryptocurrencies.
For example, it’s not quite clear if and how established securities laws apply to virtual coins. Moreover, the SEC has stated that regulations are applicable, but has not yet clearly specified just how they can be enforced in a formal manner. As a result, crypto-related companies have had to resort to self-disclosure and some have also consulted lawyers to help represent them professionally. Quite often, even lawyers aren’t sure just how to properly draft the proper legal paperwork to show that the crypto firm is legitimate. Due to these complications and lack of clarity about crypto regulations, many crypto startups have chosen to exclude American investors from using their services.
Numerous Subpoenas Issued By the SEC
Arrington’s crypto fund is not the only one subpoenaed by the SEC. As the Wall Street Journal reported on February 28th, the federal regulator has subpoenaed a number of crypto-related businesses as part of its extensive probe. While the Wall Street article didn’t mention any companies in particular, it has been widely reported that Bitfinex and Tether were subpoenaed recently regarding their crypto-related activity.
For the most part, SEC’s subpoenas have demanded information related to the sales structure of ICOs, including their pre-sales. Furthermore, these subpoenas have been sent out from SEC’s offices in Boston, New York, and San Francisco, as noted by Jason Gottlieb, partner at law firm Morrison Cohen. Gottlieb’s role has been to serve as the company’s head of its cryptocurrency litigation department.
It is clear from these developments that there are no experts in the crypto industry who know everything, as it is rapidly growing and evolving. As everyone begins to learn more about this new technology, many of the problems and challenges we’re experiencing today should subside.