Overstock.com Inc saw its share tumble 10% following its filing which revealed an ongoing investigation by the US Securities Exchange Commission in its sale of cryptocurrency.
Overstock has stated that it intends to cooperate with the SEC in the investigation and is promptly responding to its request for documents.
Overstock had recently concluded an intial coin offereing pre-sale after having raised an amount of $100 million. Subsequently, a fundraiser had been initiated too.
The ICO was launched in October, 2017 and claimed to be legally compliant to SEC norms. It had used an instrument called Simple Agreement for Future Tokens.
Overstock states that the SEC investigation doesn’t imply any breach by the firm nor does it imply a negative opinion of the firm in the eyes of the SEC.
The Wall Street Journal reported on Wednesday that SEC had issued subpoenas against dozens of such ICOs in a bid for a broad investigation of the sector.
The SEC Chairman may actually ask the Senate to push for a legislation that gives the SEC oversight of the virtual currencies amidst the risks and concerns surrounding it.
He stressed that public offerings involving digital currencies are subject to the same set of norms and rules as an equity market offering.
George Giaglis, a professor at the University of Nicosia and an advisor to ICOs outside the United States of America believes that this SEC investigation will hopefully scare off potential scammers and fraudsters. He further added that SEC-determined compliance norms for ICO would probably make it an expensive affair, but in turn it would bolster investor trust and this would create a more mature market for the cryptos.
About $5.5 billion was raised via ICOs last year, contrary to the meagre figure of $200 million in 2016. The total market capitalisation of all 1500+ cryptos put together has reached almost half a trillion dollars this year.