Suspicious digital token exchanges continue to attract the US Securities and Exchange Commission's (SEC) scrutiny. Last week, the commission temporarily banned trading in shares of The Crypto Co. The company, a small penny stock, recently launched a trading operation and platform for digital coins. Its stock has seen a major surge since then and grew by more than 2,700% this month.
The SEC released statement commenting on how the stock’s massive growth in November raised questions related to illegal transactions. It was stated that investors were being provided incomplete or inaccurate information regarding the stock’s progress.
This is not an uncommon incident in the digital coin sphere. Massive leaps in the values of bitcoin, and other digital coins, are wooing investors. However, only a few of these investors have clear knowledge of how the industry works.
Strict action expected
According to SEC's ex-chairman, Harvey Pitt, startups are taking advantage of investors’ lack of adequate digital coin related knowledge. Their investments are based on the fact that “prices seem to be going up”. Pitt further commented that the next year will bring more regulations from the SEC. "We're in line for some serious regulatory responses to all of this and that will come after the first of the year," Pitt said in interview last Thursday.
This is not the first time the commission has adopted a strict stance against the trade of a suspicious cryptocurrency. It has previously banned trading of three stocks over concerns about their ICOs.
Another significant financial regulator warning against the trade of digital currencies is FINRA. In a recent statement, they warned the public against “pump and dump schemes” prevailing in the market. This is when price of a stock shoots up due to an increased number of investments resulting from false advertisement. It is important to note here that Jordan Belfort, previously known as the Wolf of the Wall Street, has also given a similar warning in the past. Many other noteworthy personalities have publicly called the market a complete scam.
Along with financial regulators, several FinTech companies are also strictly against the use of bitcoin, and other similar digital assets. This, however, seems to have no major impact on the progress of these currencies, as they rise constantly in value. It will be interesting to see whether or not SEC’s continued inspection affects the market substantially in 2018.