Overstock's $250 Million tZero ICO Snagged in SEC Subpoena; Info Request Probe

Overstock's $250 Million tZero ICO Snagged in SEC Subpoena; Info Request Probe

Overstock's $250 Million tZero ICO Snagged in SEC Subpoena; Info Request Probe

ICOs allow cryptocurrency start-ups to raise funds through the issue of digital tokens.

Inc (NASDAQ:OSTK) stock was down Thursday on news on an investigation from the U.S. Securities and Exchange Commission (SEC).

The SEC is getting ready to crack down on cryptocurrency firms and initial coin offerings.

Overstock shares briefly fell 10 percent in morning trading and were trading about 6.5 percent lower near $56.50 a share as of 10:33 a.m., ET.

Investors now have the opportunity for a refund or further participation, as the company strives to meet SEC regulations. In his testimony, the SEC head took aim at initial coin offerings that provide investors with digital tokens in exchange for a cash investment.

According to The Wall Street Journal, the SEC has "issued scores of subpoenas and information requests" asking tech companies to fill them in on their ICO dealings.

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The SEC has expressed concern that investors who have dumped money into ICOs are not aware of the associated risks. The SEC declined to comment.

The wave of subpoenas includes demands for information about the structure for sales and pre-sales of the ICOs, sources were quoted as saying.

"There should be no misunderstanding about the law", Clayton said in prepared remarks.

A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are now operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation.

"We should all come together, the federal banking regulators, the [Commodity Futures Trading Commission] and [Securities and Exchange Commission] - there are states involved as well - and have a coordinated plan for dealing with the virtual currency trading market", said Clayton.

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