Initial coin offering

{{Short description|Cryptocurrency-based funding process}} {{pp-semi-indef}} {{Update|reason=Missing major developments after 2019|date=March 2026}}

An '''initial coin offering''' ('''ICO''') or '''token sale''' is a form of capital raising in which a project issues and sells digital tokens using [[blockchain]] technology, typically in exchange for [[cryptocurrency]] or fiat currency.<ref>{{cite web |date=25 July 2017 |title=Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO |url=https://www.sec.gov/litigation/investreport/34-81207.pdf |access-date= |publisher=[[U.S. Securities and Exchange Commission]]}}</ref><ref>{{cite journal |last1=Catalini |first1=Christian |last2=Gans |first2=Joshua S. |year=2018 |title=Initial Coin Offerings and the Value of Crypto Tokens |journal=MIT Sloan Research Paper |ssrn=3137213}}</ref> The tokens may grant access to a product or service, represent participation rights within a network, or function as speculative digital assets traded on cryptocurrency markets.<ref>{{cite web |date=13 November 2017 |title=ESMA alerts investors to the high risks of Initial Coin Offerings (ICOs) |url=https://www.esma.europa.eu/press-news/esma-news/esma-alerts-investors-high-risks-initial-coin-offerings-icos |access-date= |publisher=[[European Securities and Markets Authority]]}}</ref>

ICOs emerged in the mid-2010s as a method of financing technology ventures, particularly blockchain-based projects, without relying on traditional intermediaries such as venture capital firms or public equity markets.<ref>{{cite journal |last1=Adhami |first1=Saman |last2=Giudici |first2=Giancarlo |last3=Martinazzi |first3=Stefano |year=2018 |title=Why do businesses go crypto? An empirical analysis of initial coin offerings |journal=Journal of Economics and Business |volume=100 |pages=64–75 |doi=10.1016/j.jeconbus.2018.04.001|hdl=11311/1056221 |hdl-access=free }}</ref> Depending on their structure and characteristics, tokens offered in ICOs may be treated as [[Security (finance)|securities]] or fall under other regulatory frameworks, and regulatory treatment varies widely across jurisdictions.<ref>{{cite web |date=12 September 2017 |title=Consumer warning about the risks of Initial Coin Offerings ('ICOs') |url=https://www.fca.org.uk/news/statements/consumer-warning-about-risks-initial-coin-offerings |access-date= |publisher=[[Financial Conduct Authority]]}}</ref><ref>{{cite web |date=2018 |title=Statement on cryptocurrencies and initial coin offerings |url=https://www.bis.org/publ/arpdf/ar2018e5.htm |access-date= |publisher=[[Bank for International Settlements]]}}</ref> Some countries have imposed restrictions or bans on ICO activity, including [[China]], which prohibited domestic token offerings in 2017.<ref>{{cite news |date=4 September 2017 |title=China bans ICO fundraising, orders platforms to refund investors |url=https://www.reuters.com/article/us-china-bitcoin-ico-idUSKCN1BI0N9 |access-date= |publisher=[[Reuters]]}}</ref>

ICOs are typically conducted online and can raise funds globally without the involvement of traditional financial intermediaries.<ref>{{Cite news |last=Popper |first=Nathaniel |date=2017-11-26 |title=Initial Coin Offerings Horrify a Former S.E.C. Regulator |url=https://www.nytimes.com/2017/11/26/business/initial-coin-offering-critic.html |access-date=2026-04-18 |work=The New York Times |language=en-US |issn=0362-4331}}</ref>

The rapid expansion of ICO markets between 2016 and 2018 was accompanied by significant investor losses, project failures, and enforcement actions related to fraud and unregistered securities offerings.<ref>{{cite news |last1=Shifflett |first1=Shane |last2=Jones |first2=Coulter |date=17 May 2018 |title=Buyer Beware: Hundreds of Bitcoin Wannabes Show Hallmarks of Fraud |url=https://www.wsj.com/articles/buyer-beware-hundreds-of-bitcoin-wannabes-show-hallmarks-of-fraud-1526573115 |access-date= |publisher=[[The Wall Street Journal]]}}</ref><ref>{{cite journal |last1=Chohan |first1=Usman W. |year=2017 |title=Initial Coin Offerings (ICOs): Risks, Regulation, and Accountability |journal=SSRN Electronic Journal |doi=10.2139/ssrn.3080098}}</ref> Regulators and international financial institutions have since emphasised investor protection, disclosure requirements, and the application of existing securities laws to many token offerings.<ref>{{cite web |date=2019 |title=Framework for “Investment Contract” Analysis of Digital Assets |url=https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets |access-date= |publisher=[[U.S. Securities and Exchange Commission]]}}</ref>

== History == {{Update section|date=March 2026}} Early token sales emerged alongside the development of blockchain-based fundraising mechanisms in the early 2010s. One of the first widely cited offerings was conducted by Mastercoin in 2013, followed by Ethereum's 2014 token sale, which raised approximately 31,000 bitcoin to fund development of its blockchain platform.<ref>{{cite news |last=Rooney |first=Kate |title=Ethereum falls on report that the second-biggest cryptocurrency is under regulatory scrutiny |url=https://www.cnbc.com/2018/05/01/ethereum-falls-on-report-second-biggest-cryptocurrency-is-under-regulatory-scrutiny.html |work=CNBC |date=1 May 2018 |access-date=26 February 2026}}</ref>

Initial coin offerings expanded rapidly in 2016 and 2017 as blockchain-based projects used token sales to raise capital outside traditional venture capital and public equity markets.<ref>{{cite journal |last=Adhami |first=Saman |last2=Giudici |first2=Giancarlo |last3=Martinazzi |first3=Stefano |title=Why do businesses go crypto? An empirical analysis of initial coin offerings |journal=Journal of Economics and Business |volume=100 |pages=64–75 |year=2018 |doi=10.1016/j.jeconbus.2018.04.001|hdl=11311/1056221 |hdl-access=free }}</ref> Academic research and financial reporting documented large increases in capital raised during this period, with billions of dollars invested globally through token sales.<ref>{{cite journal |last=Fenu |first=Gianni |last2=Marchesi |first2=Lodovica |last3=Marchesi |first3=Michele |last4=Tonelli |first4=Roberto |title=The ICO phenomenon and its relationships with Ethereum smart contract environment |journal=arXiv |year=2018 |url=https://arxiv.org/abs/1803.01394}}</ref>

The expansion of ICO activity was accompanied by growing regulatory scrutiny. In July 2017, the U.S. Securities and Exchange Commission issued its Report of Investigation on The DAO, concluding that certain digital tokens offered in ICOs could qualify as securities under existing federal law.<ref>{{cite web |title=Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO |url=https://www.sec.gov/litigation/investreport/34-81207.pdf |publisher=U.S. Securities and Exchange Commission |date=25 July 2017 |access-date=26 February 2026}}</ref> Regulators in multiple jurisdictions subsequently issued warnings or restrictions, and China prohibited domestic ICO activity in 2017.<ref>{{cite news |title=China bans ICO fundraising, orders platforms to refund investors |url=https://www.reuters.com/article/us-china-bitcoin-regulation-idUSKCN1BD0C4 |work=Reuters |date=4 September 2017 |access-date=26 February 2026}}</ref>

By late 2017 and early 2018, financial authorities and international organisations were issuing coordinated risk warnings regarding investor protection, market integrity, and the application of securities laws to token offerings.<ref>{{cite web |title=Consumer warning about the risks of Initial Coin Offerings (ICOs) |url=https://www.fca.org.uk/news/statements/consumer-warning-initial-coin-offerings |publisher=Financial Conduct Authority |date=12 September 2017 |access-date=26 February 2026}}</ref><ref>{{cite web |title=ESMA alerts investors to the high risks of Initial Coin Offerings |url=https://www.esma.europa.eu/press-news/esma-news/esma-alerts-investors-high-risks-initial-coin-offerings-icos |publisher=European Securities and Markets Authority |date=13 November 2017 |access-date=26 February 2026}}</ref> Reporting in major financial media documented widespread project failures, fraud allegations, and enforcement actions during and after the peak fundraising period.<ref>{{cite news |last=Shifflett |first=Shane |last2=Jones |first2=Coulter |date=17 May 2018 |title=Buyer Beware: Hundreds of Bitcoin Wannabes Show Hallmarks of Fraud |url=https://www.wsj.com/articles/buyer-beware-hundreds-of-bitcoin-wannabes-show-hallmarks-of-fraud-1526573115 |access-date=4 March 2026 |work=The Wall Street Journal}}</ref>

Following the 2017 - 2018 boom, ICO fundraising volumes declined substantially amid regulatory enforcement and market contraction.<ref>{{cite news |title=ICOs face regulatory scrutiny in a growing number of countries |url=https://www.axios.com/2017/12/15/icos-face-regulatory-scrutiny-in-a-growing-number-of-countries-1513305298 |work=Axios |date=6 September 2017 |access-date=26 February 2026}}</ref> Policymakers and central banks increasingly emphasised the application of existing financial regulation and disclosure requirements to token-based fundraising.<ref>{{cite web |title=Statement on cryptocurrencies |url=https://www.bis.org/publ/arpdf/ar2018e5.htm |publisher=Bank for International Settlements |year=2018 |access-date=26 February 2026}}</ref>

In response to regulatory developments, some market participants began developing alternative token-based financing models designed to operate within established securities frameworks, including security token offerings and other forms of regulated digital asset issuance.<ref>{{cite web |title=Are token assets the securities of tomorrow? |url=https://www2.deloitte.com/content/dam/Deloitte/lu/Documents/technology/lu-token-assets-securities-tomorrow.pdf |publisher=Deloitte |date=February 2019 |access-date=26 February 2026}}</ref>

ICO activity declined after 2018 following increased regulatory scrutiny, though similar token sale mechanisms have continued to develop through structured platforms offered by cryptocurrency exchanges.<ref>{{cite news |date=November 10, 2025 |title=Coinbase launches new platform for early access to digital tokens |url=https://www.reuters.com/business/coinbase-launches-new-platform-early-access-digital-tokens-2025-11-10/ |access-date=April 18, 2026 |work=Reuters}}</ref>

==Criticisms==

===Fraud and regulatory concerns=== Financial regulators and law enforcement agencies have repeatedly warned that some initial coin offerings (ICOs) have been used to conduct fraud or mislead investors. Authorities in several jurisdictions have stated that the relative lack of disclosure requirements, limited investor protections, and the cross-border nature of token sales can make enforcement difficult and increase the risk of financial loss.<ref>{{cite news |date=14 June 2017 |title="Initial coin offerings" present dangers to investors, new challenge for U.S. regulators |url=https://www.reuters.com/article/technology/initial-coin-offerings-present-dangers-to-investors-new-challenge-for-us-re-idUSKBN1942GN/ |access-date=27 February 2026 |work=Reuters}}</ref>

The [[U.S. Securities and Exchange Commission]] (SEC) has brought enforcement actions against a number of ICO promoters and has warned that some offerings have involved false or misleading statements, undisclosed compensation arrangements, or unregistered securities sales.<ref>{{cite news |date=3 October 2022 |title=Kim Kardashian pays $1.26 million fine for paid crypto ad, SEC says |url=https://www.reuters.com/markets/us/sec-charges-kim-kardashian-unlawfully-touting-crypto-security-statement-2022-10-03/ |access-date=27 February 2026 |work=Reuters}}</ref> Regulators in other regions, including the United Kingdom and the European Union, have similarly warned that many ICOs are highly speculative and that investors may lose the entirety of their investment.<ref>{{cite web |date=12 September 2017 |title=Initial Coin Offerings |url=https://www.fca.org.uk/news/statements/initial-coin-offerings |access-date=27 February 2026 |publisher=Financial Conduct Authority}}</ref>

Some governments have taken restrictive measures. In 2017, China banned ICOs and ordered projects to return funds to investors, describing the practice as a form of illegal public financing.<ref>{{cite news |last1=Ruwitch |first1=John |last2=Kelly |first2=Jemima |date=5 September 2017 |title=China hits booming cryptocurrency market with coin fundraising ban |url=https://www.reuters.com/article/technology/china-hits-booming-cryptocurrency-market-with-coin-fundraising-ban-idUSKCN1BF0R7/ |access-date=27 February 2026 |work=Reuters}}</ref>

===Speculative market behaviour=== The rapid expansion of ICO fundraising during the late 2010s has been widely described by financial commentators as part of a broader period of speculative growth in cryptocurrency markets. During 2017, ICOs raised billions of dollars globally, often for early-stage projects with limited operating history, contributing to sharply rising token valuations and increased retail investor participation.<ref>{{cite news |date=14 December 2017 |title=Initial Coin Offerings Surge Past $4 Billion—And Regulators Are Worried |url=https://www.wsj.com/articles/initial-coin-offerings-surge-past-4-billionand-regulators-are-worried-1513235196 |access-date=27 February 2026 |work=The Wall Street Journal}}</ref>

Following the decline in cryptocurrency prices beginning in 2018, ICO issuance and fundraising fell substantially, and reporting by financial media described a contraction in the market alongside reduced investor demand. Analysts and market observers characterized the cycle as reflecting speculative investment behaviour followed by market correction, a pattern commonly associated with financial bubbles.<ref>{{cite news |date=11 August 2018 |title=ICO market collapses as cryptocurrency prices tumble |url=https://www.ft.com/content/5a3d5c58-9d1c-11e8-9702-5946bae86e6d |access-date=27 February 2026 |work=Financial Times}}</ref>

== Regulation == {{Update section|date=March 2026}} Following a speculative boom in cryptocurrency prices that peaked in December 2017, regulation of cryptocurrencies has been rapidly changing. The pace of change has been driven in part by incidents of cybertheft, trading halts, and possible [[market manipulation]].<ref name="Bloom3718">{{cite news|last1=Russo|first1=Camila|last2=Katz|first2=Lily|last3=Robertson|first3=Benjamin|title=Bitcoin Steadies Amid U.S., Japan Regulatory Clampdown Concern|url=https://www.bloomberg.com/news/articles/2018-03-07/bitcoin-dives-after-sec-says-crypto-platforms-must-be-registered|access-date=April 4, 2018|publisher=Bloomberg|date=March 7, 2018}}</ref>

Cryptocurrencies are based on [[distributed ledger]] technologies which enable anyone to purchase or transfer their cryptocurrency holdings to any other person without the need for an intermediary (such as an exchange) or to update a central record of ownership. Cryptocurrencies can be transferred easily across national and jurisdictional boundaries.{{citation needed|date=May 2018}} This makes it difficult for central authorities to control and monitor the ownership and movement of holdings of cryptocurrencies.

Countries have different approaches to how they regulate cryptocurrencies. This can depend on the nature of the cryptocurrency itself.

There are two main types of cryptocurrencies from a regulatory perspective: utility tokens and asset-backed tokens. Utility tokens may have value because they enable the holder to exchange the token for a good or service in the future, such as [[Bitcoin]]. Asset-backed tokens may have value because there is an underlying asset which the holder of the token can attribute value to. In many countries it is uncertain whether utility tokens require regulation, while it is more likely that asset-backed tokens do require regulation.

This makes it complex for the issuers of cryptocurrencies to analyze which countries their tokens (or coins) can be sold into, and for the prospective purchasers of cryptocurrencies to understand which regulations, if any, should apply.

{| class="wikitable sortable" !Jurisdiction !Comments |- |[[Australia]] |[[Australian Securities and Investments Commission|ASIC]] issued guidance in September 2017 stating that the legality of an ICO depends upon its detailed circumstances.<ref>{{Cite web|url=http://www.theaustralian.com.au/business/financial-services/regulators-warn-of-risks-of-investing-in-highly-speculative-icos/news-story/98f80779d513c20cca6b0a98f0426d50|title=Subscribe {{!}} theaustralian|website=www.theaustralian.com.au|access-date=2017-10-09}}</ref>{{failed verification|date=March 2018}}<ref>{{cite web|url=http://asic.gov.au/about-asic/media-centre/find-a-media-release/2017-releases/17-325mr-asic-provides-guidance-for-initial-coin-offerings/|title=ASIC provides guidance for initial coin offerings|publisher=[[Australian Securities and Investments Commission]]|date=September 28, 2017|access-date=2017-11-23}}</ref> |- |[[Canada]] |Working on regulating ICOs.{{citation needed|date=May 2019}} |- |[[China]] |On September 4, 2017, seven [[China|Chinese]] [[Financial regulation|financial regulator]]s officially banned all ICOs within the People's Republic of China, demanding that the proceeds from all past ICOs be refunded to investors or face being "severely punished according to the law".<ref>{{cite news |url=http://www.miit.gov.cn/n1146290/n4388791/c5781140/content.html|title=Seven departments on the prevention of tokens issued financing risk notice|last=Information and Communication Technology|date=September 4, 2017|work =[[Ministry of Industry and Information Technology]]|access-date=2017-09-04}}</ref><ref name="WSJ1">{{cite news|url=https://www.wsj.com/articles/some-digital-coins-are-up-2-800-what-could-go-wrong-1504522801|title=China Bans Digital Coin Offers as Celebrities Like Paris Hilton Tout Them|last=Vigna|first=Paul|date=September 4, 2017|work=[[The Wall Street Journal]]|access-date=2017-09-05}}</ref> This action by Chinese regulators resulted in large sell-offs for most cryptocurrencies.<ref name="WSJ1" /> Prior to the Chinese ban, ICOs had raised nearly $400 million from about 100,000 Chinese investors.<ref>{{cite news |url=https://www.bloomberg.com/view/articles/2017-09-06/go-ahead-try-to-stop-initial-coin-offerings|title=Go Ahead, Try to Stop Initial Coin Offerings|last=Ou|first=Elaine|date=September 6, 2017|work =[[Bloomberg News#Bloomberg View|Bloomberg View]]|access-date=2017-09-07}}</ref> A week later, however, a Chinese financial official stated on Chinese national television that the ban on ICOs is only temporary until ICO regulatory policies are in place. |- |[[France]] |As of October 2017, the [[Autorité des marchés financiers (France)|Autorité des marchés financiers]] (AMF) was working on regulations governing the use of blockchain technology in capital raising transactions.{{citation needed|date=May 2019}} In September 2018, a new legal regime introduced a visa, delivered by the AMF and obtained on a voluntary basis, which provides some financial guarantees.<ref>{{Cite news|url=https://www.lesechos.fr/12/09/2018/lesechos.fr/0302244399565_les-ico-auront-bientot-un-cadre-juridique.htm|title=Les ICO auront bientôt un cadre juridique |date=2017-10-09|work=Les Echos|access-date=2019-01-14|language=en-FR}}</ref> |- |[[Hong Kong]] |The [[Securities and Futures Commission]] released a statement in September 2017 explaining that tokens may constitute securities for purposes of the Securities and Futures Ordinance, in which case dealing in such tokens would be a regulated activity under Hong Kong law.<ref>{{Cite web|url=http://www.sfc.hk/edistributionWeb/gateway/EN/news-and-announcements/news/doc?refNo=17PR117|title=Statement on initial coin offerings|date=2017-09-05|website=Securities and Futures Commission|access-date=2017-10-24}}</ref> |- |[[Isle of Man]] |Working on regulating ICOs.{{citation needed|date=May 2019}} |- |[[Jersey]] |In December 2017, Arc Fiduciary Ltd, based in Jersey, launched the "Arc Reserve Currency", an asset-backed cryptocurrency based on the [[Ethereum]] blockchain.,<ref>{{cite web|title=Arc Reserve Currency Homepage|url=https://www.arccy.org|access-date=15 December 2017}}</ref> working closely with the Jersey Financial Services Regulator to achieve a workable regulatory solution for the ICO<ref>{{cite web|title=Carey Olsen and JTC advise ARC Fiduciary Ltd on Jersey's first ICO|date=14 December 2017|url=https://www.careyolsen.com/news-and-deals/carey-olsen-and-jtc-advise-arc-fiduciary-ltd-jerseys-first-ico|access-date=15 December 2017|archive-date=16 December 2017|archive-url=https://web.archive.org/web/20171216035618/https://www.careyolsen.com/news-and-deals/carey-olsen-and-jtc-advise-arc-fiduciary-ltd-jerseys-first-ico|url-status=dead}}</ref> The Arc Reserve Currency does not have a continuing regulatory status, but it is a notable example of how cryptocurrency operators are increasingly working with regulators to improve the investment landscape for holders of cryptocurrencies. |- |[[New Zealand]] |In October 2017, the [[Financial Markets Authority (New Zealand)|Financial Markets Authority]] (FMA) released guidelines on the current regulatory environment in regards to ICOs.<ref>{{cite web|title=Initial coin offers|url=https://fma.govt.nz/compliance/cryptocurrencies/initial-coin-offers/|website=New Zealand Financial Markets Authority|access-date=15 November 2017}}</ref> |- |[[Gibraltar]] |In October 2017, the government of [[Gibraltar]] established a framework for regulating distributed ledger technology (DLT) companies, which came into law on January 1, 2018. It encompasses ICOs and subjects them to financial controls and standards.<ref>{{Cite web|url=https://www.gibraltar.gov.gi/new/6102017-government-confirms-introduction-government-confirms-introduction-confirms-introduction|title=Government confirms introduction of Government confirms introduction of confirms introduction of Distributed Ledger Technol Distributed Ledger Technology (DLT) ogy (DLT) Regulatory Framework Regulatory Framework in January 2018 in January 2018|website=www.gibraltar.gov.gi|access-date=2017-11-05|archive-date=2017-11-25|archive-url=https://web.archive.org/web/20171125094913/https://www.gibraltar.gov.gi/new/6102017-government-confirms-introduction-government-confirms-introduction-confirms-introduction|url-status=dead}}</ref> |- |[[Republic of Korea|South Korea]] |The Korean [[Financial Services Commission (South Korea)|Financial Services Commission]] prohibited ICOs in September 2017 and promised "stern penalties" for violations.<ref>{{Cite news|url=https://www.reuters.com/article/us-southkorea-bitcoin/south-korea-bans-all-forms-of-initial-coin-offerings-idUSKCN1C408N|title=South Korea bans raising money through initial coin offerings|date=2017-09-29|work=Reuters|access-date=2017-10-09}}</ref><ref name=":0">{{Cite news|url=https://www.nytimes.com/2017/09/29/business/sec-initial-coin-offerings.html|title=New Virtual Currencies Hit Barriers in U.S. and 2 Other Nations|last=Popper|first=Nathaniel|date=2017-09-29|work=The New York Times|access-date=2017-10-09|language=en-US|issn=0362-4331}}</ref> |- |[[Switzerland]] |Although Switzerland was previously viewed as a friendly jurisdiction to coin offerings, the [[Swiss Financial Market Supervisory Authority]] announced an investigation of an unspecified number of coin offerings in September 2017, and would examine whether these offerings were in compliance with Swiss regulations.<ref name=":0" /><ref>{{Cite web|url=https://www.finma.ch/en/news/2017/09/20170929-mm-ico/|title=FINMA is investigating ICO procedures|website=FINMA|access-date=2017-11-11|archive-url=https://web.archive.org/web/20181116220243/https://www.finma.ch/en/news/2017/09/20170929-mm-ico/|archive-date=2018-11-16|url-status=dead}}</ref> |- |[[Turkey]] |Although cryptocurrencies are legal in Turkey, cryptocurrency based business models are not, making initial coin offerings illegal as a result. |- |[[United Arab Emirates]] |The [[Abu Dhabi Global Market]] issued official guidance on ICOs in October 2017.<ref>{{Cite news|url=http://gulfnews.com/business/sectors/markets/abu-dhabi-global-market-sets-guidance-on-initial-coin-offerings-virtual-currencies-1.2103239|title=Abu Dhabi Global Market sets guidance on initial coin offerings, virtual currencies|last=Diaa|first=Sarah|date=2017-10-09|work=GulfNews|access-date=2017-10-09}}</ref> |- |[[United States]] |In July 2017 the [[U.S. Securities and Exchange Commission]] (SEC) indicated that it could have the authority to apply federal securities law to ICOs.<ref>{{cite news |last1=Press release |title=SEC Issues Investigative Report Concluding DAO Tokens, a Digital Asset, Were Securities |url=https://www.sec.gov/news/press-release/2017-131 |access-date=1 November 2019 |work=U.S. Securities and Exchange Commission |issue=2017–131 |date=25 July 2017}}</ref> The SEC did not state that all blockchain tokens (ICOs) would necessarily be considered securities, but that determination would be made on a case-by-case basis.{{citation needed|date=May 2019}} In April 2019, the SEC's "FinHub" office issued a guidance featuring over thirty factors that may be used to determine that a digital asset is a security.<ref>{{Bluebook journal |first=|last=Note| title=Recent Guidance: SEC Provides Analytical Tools for Assessing Digital Assets| volume=132 | journal=[[Harvard Law Review|Harv. L. Rev.]] | page=2418 | url=http://harvardlawreview.org/wp-content/uploads/2019/06/2418-2426_Online.pdf| year=2019}}</ref><ref>{{cite news |last1=SEC Strategic Hub for Innovation and Financial Technology |title=Framework for "Investment Contract" Analysis of Digital Assets |url=https://www.sec.gov/corpfin/framework-investment-contract-analysis-digital-assets |access-date=1 November 2019 |work=U.S. Securities and Exchange Commission}}</ref>

The SEC charged Maksim Zaslavskiy for fraud in September 2017 in connection with the ICOs for RECoin and DRC World.<ref>{{Cite news|url=https://techcrunch.com/2017/09/29/the-sec-has-charged-two-initial-coin-offerings-with-defrauding-investors/|title=The SEC has charged two initial coin offerings with defrauding investors|last=Buhr|first=Sarah|work=TechCrunch|access-date=2017-10-09|language=en}}</ref><ref>{{cite news |last1=Press release |title=SEC Exposes Two Initial Coin Offerings Purportedly Backed by Real Estate and Diamonds |url=https://www.sec.gov/news/press-release/2017-185-0 |access-date=1 November 2019 |work=U.S. Securities and Exchange Commission |issue=2017–185 |date=29 September 2017}}</ref> In November 2018, Zaslavskiy pleaded guilty to charges that carry a term of up to five years imprisonment.<ref>{{cite news |last1=Press release |title=Brooklyn Businessman Pleads Guilty to Defrauding Investors through Two Initial Coin Offerings |url=https://www.justice.gov/usao-edny/pr/brooklyn-businessman-pleads-guilty-defrauding-investors-through-two-initial-coin |access-date=1 November 2019 |work=United States Department of Justice |date=15 November 2018 |language=en}}</ref>

The SEC ruled that celebrity ICO endorsements must disclose the amount of any compensation paid for the endorsement.<ref>{{cite web |title=SEC Statement Urging Caution Around Celebrity-Backed ICOs |url=https://www.sec.gov/newsroom/speeches-statements/statement-potentially-unlawful-promotion-icos-sec-statement-urging-caution-around-celebrity-backed-icos |website=SEC.gov |date=November 1, 2017 |access-date=October 28, 2025}}</ref>

In December 2017, the SEC issued an order stating that the utility-token ICO of Munchee Inc. was classified as a security.<ref name="sec.gov">{{Cite web|url=https://www.sec.gov/news/press-release/2017-227|title=Company Halts ICO After SEC Raises Registration Concerns|website=SEC|access-date=2017-12-15}}</ref> In April 2018 the SEC charged two co-founders of Centra Tech, Inc., with running a fraudulent ICO that raised more than $32 million in 2017. The company had drawn endorsements from celebrities including [[Floyd Mayweather Jr.]] and [[DJ Khaled]].<ref>{{cite news|url=https://www.wsj.com/articles/sec-charges-startup-co-founders-with-fraudulent-initial-coin-offering-1522715492|title=SEC Charges Startup Co-Founders with Fraudulent Initial Coin Offering|newspaper=[[The Wall Street Journal]]|date=April 2, 2018|first=Aisha|last=Al-Muslim}}</ref>

In September 2019, block.one agreed to settle charges related to its $4 billion unregistered ICO of [[EOS.IO]] for a $24 million penalty.<ref>{{cite news |last1=Silva |first1=Matthew De |title=Crypto companies are settling with the SEC, but that's not stopping them |url=https://qz.com/1720295/after-4b-ico-block-ones-24m-sec-settlement-lets-it-keep-building/ |access-date=1 November 2019 |work=[[Quartz (publication)]] |date=3 October 2019 |language=en}}</ref><ref>{{cite news |last1=Press release |title=SEC Orders Blockchain Company to Pay $24 Million Penalty for Unregistered ICO |url=https://www.sec.gov/news/press-release/2019-202 |access-date=1 November 2019 |work=U.S. Securities and Exchange Commission |issue=2019–202 |date=30 September 2019}}</ref> The settlement did not require a restitution offer, registration of tokens, or any disqualifications.<ref>{{cite news |last1=Rosenblum |first1=Robert |last2=Caiazza |first2=Amy |last3=Evenson |first3=Taylor |last4=Goodrich |first4=Wilson Sonsini |title=Less Aggressive SEC Sanctions on Violations by Crypto Issuers |url=https://corpgov.law.harvard.edu/2019/10/26/less-aggressive-sec-sanctions-on-violations-by-crypto-issuers/ |access-date=1 November 2019 |work=Harvard Law School Forum on Corporate Governance and Financial Regulation |date=26 October 2019}}</ref>

|}

==See also== {{Portal|Money}} * [[Alternative currency]] * [[Airdrop (cryptocurrency)|Airdrop]] * [[Digital asset]] * [[Private currency]]

== References == {{Reflist|2}}

{{Cryptocurrencies|state=expanded}}

[[Category:Cryptocurrencies]] [[Category:Blockchains]] [[Category:Digital currencies]] [[Category:Fundraising]] [[Category:Decentralized finance]]