SEC goes after public companies for referencing ICO
The SEC suspended trading of common stocks of the publicly traded companies First Bitcoin Capital Corp., CIAO Group, Strategic Global, and Sunshine Capital, which made claims regarding their investments in ICOs or touted coin/token related news.
The SEC is concerned that while token investment activities may provide legitimate investment opportunities, they may also be used to affect the price of the company’s common stock when companies publicly announce ICO.
Very often stocks of the companies go up simply because of the news or announcements made by the companies, including the news about exposure to or participation in the new technology. The blockchain technology, in particularly related to the ICOs, has been a hype in a recent couple of years. And, as such, announcements of the ICO related activities, which already generated a combined amount of over 1 Billion of U.S. dollars for participating companies, could be used as “pump-and-dump” and other market manipulation schemes to grow the price of common stock of the publicly traded companies.
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