'Roaches': SEC Chief Speaks Out Against Malicious ICOs

An official with the US Securities and Exchange Commission addressed ICOs in off-the-cuff remarks at an event this week.

Sep 6, 2017 at 12:00 p.m. UTC
Updated Sep 13, 2021 at 6:53 a.m. UTC

A member of the U.S. Securities and Exchange Commission's (SEC) division of enforcement has spoken out against malicious initial coin offerings (ICOs).

In seemingly off-the-cuff remarks at a panel discussion in New York on Tuesday, SEC co-director Steven Peikin claimed that such sales could pose a threat to retail investors, a problem which the SEC is now trying to address according to Reuters.

Most notably, he compared those seeking to leverage the blockchain use case improperly to cockroaches.

Peikin reportedly told attendees:

"As with any kind of newsworthy event, roaches kind of crawl out of the woodwork and try to scam money off of investors."

The comments follow an escalation of regulatory announcements on ICOs, with the SEC recently ruling tokens may be be classified as securities (though such decisions are being made case-by-case). Since then, Canada, China and Hong Kong have followed suit, with only China taking aggressive steps to ban ICOs altogether.

On the heels of those announcements, the SEC is said to be targeting bad actors in the space, with Peikin indicating this responsibility has fallen to the agency's distributed ledger technology group, launched in 2013.

In recent weeks, that group has taken action against ICOs still in development, with the SEC putting a particular emphasis on publicly traded companies. Various other SEC investigations on fraudulent ICOs are underway, Peikin reportedly stated.

According to CoinDesk data, ICOs have raised $1.8 billion all-time as of August.

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