Cryptocurrency brokerage firms now have many questions to answer, as SEC latest probe targets them.
SEC’s has requested to know information about the structure for sales, clearing agreements, details on personnel and advisors involved.
According to Bloomberg report on Thursday, The Securities and Exchange Commission sent information requests in recent weeks to dozens of US brokerage firms who are involved in cryptocurrency, because tacking misconduct in the burgeoning market is becoming their main target.
Other things that was investigated by the top U.S. securities regulator was to examine the brokers’ business practices and how they deal with clients, as well as fees generated from crypto trading, financing and ICOs.
Information about the structure for sales, clearing agreements, marketing materials, details on personnel and advisors involved, and more was also requested by SEC.
The watchdog is worried that in many cases, retail investors aren’t adequately told about the risks involved in the cryptocurrency investment products.
The warning basically is that many crypto-linked activities may be violating securities laws. SEC Chairman Jay Clayton described the ICO market earlier this year as “rife with fraud.” Hence is the latest scrutiny and probe on the cryptocurrency brokerage firms.
However, many companies have put their offerings on hold after the SEC issued warnings. Further, the agency froze assets of several cryptocurrency firms, stopped ICOs and suspended trading in companies that claimed cryptocurrency or blockchain dealings.
The agency Putting cryptocurrency companies and their advisers on notice, however, failed to chill the booming market. But do you think SEC investigation is something to be worried about?