SEC may investigate exchanges facilitating IEOs, official says

The U.S. Securities and Exchange Commission (SEC) may look into US-based crypto exchanges that have carried out initial exchange offerings (IEOs), CoinDesk writes.

Exchanges may be operating as unauthorised securities dealers under U.S. securities laws if they take a fee for facilitating token sales, SEC official Valerie Szczepanik told an audience at the Consensus 2019 conference in New York. According to Szczepanik, they’d need to fulfill broker-dealer licencing requirements.

“Platforms seeking to list these tokens for a listing fee or bring buyers to the table for issuers are probably engaging in broker-dealer activity,” Szczepanik said.

Although Szczepanik does not mention any exchanges by name, Binance, OKEx, Bittrex and KuCoin have facilitated IEOs and have likely made profits from them.

Szczepanik also believes the action against TokenLot for facilitating an ICO “was instructive.”

“In this case, there was an enforcement action, as the platform was acting as a broker-dealer and participating in the distribution with a violation of the registration provisions,” he said.