27 December 2017
On December 11th, 2017, the SEC filed a cease-and-desist order against Munchee Inc. to halt its Initial Coin Offering. This was the first SEC enforcement action brought on the basis that the ICO was an unregistered offer and sale of securities in violation of the registration requirements of the Securities Act, and not on a fraud-related claim. This order came just a week after the SEC secured an emergency asset freeze against PlexCorps for making materially false and misleading statements in addition to failing to comply with securities registration requirements in the context of an ICO. Following these two enforcement actions, SEC Chairman Jay Clayton released a Statement on Cryptocurrencies and Initial Coin Offerings reemphasizing the SEC's view - laid out earlier in the year with the release of the DAO report - that simply ascribing the adjective "utility" to a token or even structuring it to provide some redemption-related use does not insulate the offer and sale of the token from being subject to the registration requirements of the Securities Act. Chairman Clayton's statement and these actions reveal that ICOs will continue to be an area of focus for the SEC.