The US Supreme Court will restrict the power that the Securities and Exchange Commission has over Initial Coin Offerings (ICO) and the fines related to it. In our latest crypto regulation news, we take a closer look at the report.
According to Bloomberg, the US Supreme Court issued a ruling on Monday which put a cap on the heavy disgorgement sought by the SEC in fraud cases. A part of the decision from the court which came with an 8-to-1 majority, the Commission can no longer look for disgorgement above the profits of the indicted party. Apart from restricting the disgorgement, Justice Sonia Sotomayor explained to the court that the funds recouped by the Commission have to be geared upon restitution of affected investors. The other situations where such transfers for investors are not possible, the Supreme Court recommends that the funds have to be sent to the Treasury.
For the SEC, the Court’s decision is a huge win despite the reduction in power. Some pundits say that the ruling is preferable to the total eradication of the ability of the commission o seek such fines and penalties. The Supreme Court’s ruling could heavily impact some of the crypto projects within the country that already have pending cases that are under SEC investigation. Since 2017, the Commission was going after ICOs describing them as unlicensed security token sales. For example, the Telegram token sale event was one of the biggest victories for the commission in its ICO enforcement activities. Despite conducting one of the biggest earning ICOs, Telegram was unable to go on with the planned TON blockchain launch.
As per the recent reports, the SEC has brought charges against a few 2017 Initial coin offerings. Celebrities and other public figures couldn’t get away from the SEC enforcement with many of the popular actors and musicians such as DJ Khaled and Floyd Mayweather got into trouble with it as well. The Securities and Exchange Commission’s characterization of the ICO tokens as securities could change if Congress decides to pass the Token Taxonomy act. This piece of legislation aims to protect cryptocurrencies from securities laws while still providing a “de minimis” tax exemption for profits made of crypto that trade below a certain limit.
The Cryptocurrency Act of 2020, Congress aims to provide a new framework for classifying digital assets while still delineating many of the responsibilities of Federal regulatory agencies regarding cryptocurrencies.
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