The Securities and Exchange Commission (SEC) has sent out a large number of subpoenas and information requests probing companies as well as advisers that work in the cryptocurrency or virtual token industry.
The actions come after warnings from the Securities and Exchange Commission about how it would examine and potentially increase enforcement action on digital tokens aka cryptocurrencies.
The enforcement agency has previously taken action on crypto-scams and what it believed to be unregistered securities masquerading as initial coin offerings (ICOs) — a now popular fundraising method for cryptocurrency-based startups.
These subpoenas reportedly demand information on initial coin offerings (ICOs) and their subsequent presales.
SEC Chairman Jay Clayton has been notably critical of the practice of fundraising through initial coin offerings, saying during a Congressional hearing earlier in the month that he suspects many violate SEC regulations.
“Many initial coin offerings are being conducted illegally,” Clayton told lawmakers at the time. “They are not following U.S securities laws. Some say that this is because the law is not defined clearly. I strongly doubt that.”
The popularity of cryptocurrencies and initial coin offerings have exploded over the past year, as prominent virtual currencies like bitcoin and ethereum saw their market caps grow by billions and billions of dollars. Last year alone, initial coin offerings amounted to $6.5 billion in fundraising.