Bitcoin
$42,004.20+6.27%
Ethereum
$2,269.44+4.65%
Binance Coin
$229.34+1.47%
XRP
$0.64015045+1.56%
Solana
$63.36-0.48%
Cardano
$0.41035028+3.79%
Dogecoin
$0.09002851+6.04%
Tron
$0.10870989-2.49%
Chainlink
$16.05-0.09%
Avalanche
$22.81+3.94%
Polygon
$0.82414672+1.68%
Polkadot
$5.67+4.01%
PlayIconNav
Crypto Prices CoinDesk Market Index CoinDesk Market Index
Markets

SEC Chairman: ICO Trading Susceptible to Price Manipulation

The growing market for cryptographic tokens is at risk for market manipulation, according to SEC chairman Jay Clayton.

By Brady Dale
AccessTimeIconNov 8, 2017 at 6:45 p.m. UTC
Updated Sep 13, 2021 at 7:08 a.m. UTC
Screen Shot 2017-11-08 at 1.46.56 PM

10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

The SEC is continuing to step up its rhetoric on initial coin offerings (ICOs).

Speaking before the Practicing Law Institute's Institute on Securities Regulation in New York today, Chairman Jay Clayton described the market as opaque and vulnerable to manipulation. In his full remarks, he went on to characterize tokens issued for startup or open-source project fundraising as ripe for misconduct, mentioning them alongside penny stocks and hidden fees on investment products.

He told attendees:

"[I]nvestors often do not appreciate that ICO insiders and management have access to immediate liquidity, as do larger investors, who may purchase tokens at favorable prices. Trading of tokens on these platforms is susceptible to price manipulation and other fraudulent trading practices."

Citing the SEC's findings from its examination of the DAO meltdown, Clayton also reiterated that cryptocurrency exchanges need to either be registered or get an exemption.

He added that "the Commission will continue to seek clarity for investors on how tokens are listed on these exchanges and the standards for listing; how tokens are valued; and what protections are in place for market integrity and investor protection."

The SEC chairman described penny stocks and ICOs as "topics that have proven over time to be fertile ground for fraud on investors," though he admitted further policy is needed on the issue.

He concluded:

"The SEC may not yet have policy or rulemaking answers in these areas, but we are on the lookout for ways to fight the type of opacity that can create an environment conducive to misconduct."

Jay Clayton photo via YouTube

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.