The U.S. Securities and Exchange Commission (SEC) reportedly formed a dedicated ‘Digital Currency Working Group’, and has been keeping an eye on the industry.
In a December 8 press release, the regulator featured the new group. It was around that time that the SEC fined an Ethan Burnside $58,000 for alleged securities laws violations for his operation of several bitcoin and litecoin denominated “virtual stock exchanges”. The group reportedly coordinated the investigation.
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The group consists of fifty members from various SEC offices and divisions. Its stated aim is to foster information sharing, both internally and externally.
Interestingly, the group was actually formed back in 2013, but was not mobilized for enforcement action until the time of the aforementioned press release. It is therefore likely that the group has been active in both disclosed and undisclosed investigations currently in progress. They have probably also played an active role in composing investor advisories on digital currency, warning about risks such as volatility, exchange shutdowns and theft.
Marco Santori and Jeffrey Jacobi of Pillsbury Winthrop Shaw Pittman LLP brought the development to light in a recent client alert. They noted that the SEC entry into this enforcement arena came at the same time as its ruling that although digital currencies are not considered “securities”, shares or other interests priced in them are considered such.