24 Oct 2019
Some coin offerings promoters are still gaining access to investors via the form D exempt of SEC. The brave promoters were not unfazed even after the earlier strict rule SEC has placed on some promoters.
An analysis by Marketwatch revealed that about 34 new fundraisings related to ICOs in the past six months. The number is in addition to the 33 fundraisings in the first quarter of the year. The second and third quarters had a combined total of $1.4 billion, which is lower than the $1.9 billion received in the first quarter of 2019.
Form D is a notice given by a firm for offerings that excluded from SEC’s registration requirements. There is a requirement for individuals or companies to receive a Form D. Companies are expected to have more than $5 million in assets, while individuals need to continually make more than $200,000 yearly or have at least $1 million as assets. These are the accredited persons who are allowed to receive a Form D.
The idea is to weigh the risk tolerance level of the participant to make sure they have a secured landing. Even with these conditions, some promoters who met these criteria are still facing issues when it comes to the Form D.
MarketWatch first made a report of this backdoor fundraising method in February last year. However, from MarketWatch’s resort, activities had diminished heavily since last year when the tactic began. Through Form D’s, SEC received about 287 ICO-linked fundraisings. The fundraisings had a combined value of about $8.7 billion, MarketWatch reported.
Between May and July last year, the SEC received the highest number of ICO-related fundraisings, with 99 entries. It has never crossed this level since then.
MarketWatch makes use of a comprehensive database to identify fillings via the Form D. It searches the SEC’s Form D edgar database for words such as “Saft,” “initial coin offering,” “token,” as well as “ICO.”
SEC has recently introduced some stringent rules that will make it more difficult to get coin offerings via the Form D platform. However, some coin offering promoters are still scaling these requirements.
On October 15, SEC filed a suit against Telegram and its Ton subsidiary. In SEC’s assertion, the company is offering its TON token without going through the right legal requirements. The coin covering has raised about $1.7 billion, but the SEC is restraining it from proceeding with the offering until the company meets the requirements. Telegram insisted that it filed a Form D regarding the coin offering more than a year ago. But SEC is taking none of that. On a worse note, Telegram may not be able to establish the TON token if the court rules against it in February next year.
Despite this serious suit and sanction from SEC, other promoters are still taking a bold step to go through SEC’s backdoor to offer coins. It is still unclear how SEC intends to take actions to make sure the players in the industry follow the rules and meet the requirements.
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