In a first enforcement action against an Initial Coin Offering (ICO), the Securities and Exchange Commission obtained an emergency asset freeze to stop a the sale of “Plexcoins.”
Although the action was against alleged serial Canadian fraudsters, it marks the first take down of a token offering by the SEC’s new Cyber Unit that was first organized in September.
And guess what, the complaint filed in Brooklyn Federal Court alleges violation of the registration provisions of the Securities Act of 1933. No surprise as Chairman Clayton said a few weeks ago that he hasn’t yet seen an ICO that wasn’t a securities offering.
A novel remedy requested in this case is a bar of the defendants from being involved in further offerings of “digital securities” – a term newly coined (pun intended) by the regulators.