SEC Subpoenas Crypto Venture Capital Firms in Potential Enforcement Actions Against Digital Asset Industry: Report

The U.S. Securities and Exchange Commission (SEC) has reportedly subpoenaed at least three crypto venture capital firms in 2024.

Citing a source familiar with the matter who wished to remain anonymous, DL News reports that three crypto VC firms received identical subpoenas from the SEC requesting any contract of token deals with investors. 

“The staff of the United States Securities and Exchange Commission is conducting an investigation relating to the above-referenced matter to determine if violations of the federal securities laws may have occurred.”

The source close to the matter says the SEC is probing whether crypto venture capital firms are acting as statutory underwriters – entities that purchase digital assets with the intent of reselling them to the public.

Venture capital firms often invest in digital asset startups and are rewarded with the projects’ tokens. In most cases, some tokens are issued upon investment with more being released through scheduled unlocks.

New crypto projects are allowed by the SEC to sell unregistered securities in the form of tokens to accredited investors, meaning they can sell their coins to VC firms, but not to the general public.

“The accredited investor concept identifies investors who are eligible to participate in those offerings of unregistered and illiquid securities.”

The SEC appears to be looking at whether crypto VC firms are serving as agents who participate in the public sale and release of unregistered securities.

Says the source,

“It poisons the initial issuance.”

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