Issuers, investors, and gatekeepers including lawyers and banks should be aware that the Securities and Exchange Committee is continuing to invest significant resources in ICO and cryptocurrency investigations.  The Wall Street Journal reports that the SEC has initiated an informational sweep focused on digital tokens. We understand that the SEC is conducting a broad inquiry, seeking a diverse set of information from entities in this space through subpoenas and requests for information.

This informational sweep follows earlier pronouncements from the SEC that it is focusing attention on ICOs and cryptocurrencies.  The SEC's Office of Compliance Inspections and Examinations highlighted "Cryptocurrency, Initial Coin Offerings, Secondary Market Trading, and Blockchain" as one of its priorities when it released its 2018 Exam Priorities on February 7, 2018.  Then, during the annual PLI "SEC Speaks in 2018," there were cascading messages regarding the SEC's focus on ICOs and cryptocurrency:

• The SEC's Enforcement Division Co-Chair Stephanie Avakian says her Division has many ongoing cryptocurrency investigations. 
• Chairman Clayton stated that he predicted more enforcement actions until the industry changes its behavior.
• The Chief of the SEC's Cyber Unit, Robert Cohen, said his unit has been active in bringing enforcement actions and has contacted other companies to voluntarily stop their ICOs.

(Review our recent summary of the SEC Speaks in 2018 here).  We will continue following the SEC's investigation and any enforcement activity or new regulations that arise from it.