SEC Chairman: Investing in ICOs requires “extreme caution”

As Bitcoin prices skyrocket and ICO financing becomes increasingly popular, the U.S. Securities and Exchange Commission (SEC) has also begun to remind investors to guard against risks in digital currency and ICO transactions.

In an official statement released on December 11, Jay Clayton, chairman of the U.S. Securities and Exchange Commission, said that investors should be cautious about digital currency and ICO investments:

If an opportunity sounds too good to be true, or you are pressured to act quickly, proceed with extreme caution.

He pointed out that no ICO project is registered with the U.S. Securities and Exchange Commission and any transaction must be conducted with caution.

Clayton made the above speech against the backdrop of the recent surge in bitcoin prices, which has attracted a large number of investors. On November 29 this year, bitcoin prices broke through the $10,000 mark for the first time in history; on December 8, data from the U.S. trading platform GDAX showed that bitcoin prices once exceeded $19,000, then fell back; on December 12, data from multiple trading platforms showed that bitcoin prices were close to $17,000. Since the beginning of the year, bitcoin's cumulative increase has been close to 1,600%.

Clayton also said that day: "I encourage investors to keep an open mind to these investment opportunities, but be good at asking questions, figuring out the answers, and staying rational when investing." Clayton's statement was accompanied by a series of questions that the U.S. Securities and Exchange Commission recommends that investors refer to before investing in digital currencies and ICOs, including "Where did my money go?" and "Is the blockchain open and public?"

This is not the first time that Clayton has warned about the investment risks of digital currencies and ICOs. In November this year, he said at the Securities Regulatory Conference of the New York Law Society that the ICO market is opaque and investors are easily manipulated:

Investors often fail to realize that ICO insiders and management have access to immediate liquidity, may purchase tokens at favorable prices, and that token trading on these platforms is susceptible to price manipulation and other fraudulent activities.

He also pointed out that some digital currency sales have the characteristics of securities sales, so companies selling such products in the United States must comply with existing securities laws. Any person or entity engaged in exchange activities must register as a national securities exchange.