On January 14, 2020, the U.S. Securities and Exchange Commission (SEC) Office of Investor Education and Advocacy published an investor alert (Alert) regarding initial exchange offerings (IEOs), a type of digital asset fundraising facilitated by online trading platforms.1 Although the Alert is directed at investors, it provides important information to blockchain companies and trading platforms. The Alert highlights the following:
- an explanation of an IEO
- IEOs that are securities offerings must comply with federal securities laws
- a platform offering an IEO may need to register as a broker-dealer, national securities exchange or operate pursuant to an exemption, such as an alternative trading system (ATS)
- IEOs offered to U.S. investors, even if offered from outside the United States, must comply with federal securities laws
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