November 19, 2018 News

Jason Gottlieb Quoted on SEC's First Settlement with Unregistered Initial Coin Offerings – Warning and Path to Compliance

November 19, 2018 – Morrison Cohen Partner Jason Gottlieb was quoted in the article “SEC Provides ‘Path To Compliance’ For Unregistered ICOs”, that appeared on November 16, 2018 in Law360 on the Securities and Exchange Commission settlement of two actions involving initial coin offerings by levying its first fines against unregistered ICOs and requiring the companies to properly register the tokens as securities, outlining what the regulator referred to as “a path to compliance with the federal securities laws going forward.”

CarrierEQ Inc., known as Airfox, and Paragon Coin Inc. each agreed to pay penalties, properly register their digital tokens as securities, and file periodic reports with the SEC after raising money from initial coin offerings that weren’t registered and didn’t qualify for an exemption. 

“This is the first time we’ve seen a road map of sorts from the SEC,” said Morrison Cohen partner Jason Gottlieb.

“The DAO Report is widely seen as a warning by the SEC that digital tokens are most likely subject to federal securities laws, and the agency's recent actions indicate that market participants have had ample time to heed the warning.  Attorneys and accountants advising companies about whether their tokens are securities should pay special attention to this message, since they’re considered the experts,” Gottlieb said.

“If the reason these penalties were relatively light was because [the companies] were relying on the advice of lawyers or accountants or others, then the SEC cannot be too happy with those lawyers and accountants right now,” Gottlieb said.