On September 29, the SEC brought its first enforcement action in connection with an initial coin offering ("ICO"). According to the complaint, the particular digital tokens in question were allegedly backed by fictitious assets, and the defendants fraudulently raised $300,000 from hundreds of investors. The enforcement action followed guidance from the SEC over the past several months that "virtual coins or tokens may be securities and subject to the federal securities laws" and alerting investors to potential scams involving companies using ICOs in pump-and-dump schemes.
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