The SEC Looks at Overstock’s Token Sale

March 6, 2018         By: Steven Anderson

We heard that the Securities and Exchange Commission (SEC) in the United States was suddenly getting a lot more diligent about this whole “cryptocurrency” thing, and that’s a development that’s left some visibly shaken. It recently took aim at the token sale, and that was enough to send share prices crashing through the floor, down 10 percent at one point.

Overstock, of course, noted that it would cooperate fully, and was delivering the documents requested. The launch was announced back in October, and the company noted it would be using an instrument that the SEC recently noted would receive particular scrutiny in the days to come, the Simple Agreement for Future Tokens.

Naturally, Overstock pointed out that just because the SEC was engaging in investigations did not mean that anyone had either violated the law or that the SEC had what the company called “a negative opinion of any person, entity or security.” In fact, the SEC had been launching literal scads of investigations and requests for documentation as part of a larger investigation.

George Giaglis, with the University of Nicosia in Cyprus who serves as an advisor to ICOs launched outside the United States hoped that the investigations would “…scare scammers and fraudsters.” He also noted that future ICOs would likely be more expensive, but also safer, part of a “more mature market.”

Of course, what Giaglis doesn’t note here is what we just saw: an SEC investigation doesn’t just scare “scammers and fraudsters.” It scares literally everybody. There are essentially only two forces in the universe that have impact enough to influence a corporation’s actions: sufficiently large market pressures like boycotts or government action. The SEC’s massive new witch hunt against cryptocurrency is likely to have a chilling effect, if only for a while. is almost certainly not a “scammer” or a “fraudster,” but it took a 10 percent sock in the share price all the same.

With initial coin offerings (ICOs) raising about $5.5 billion just last year—up from $200 million in 2016—it’s clear that there’s a lot of reason to watch this market more closely. We’re at the dawn of a potentially amazing new era; let’s not clamp down the heavy hand of government guidance before we’ve even really begun.