The U.S. Securities and Exchange Commission announced on January 21st actions against Opporty, an ICO that had taken place back in 2018. According to the official press release, the Commission “charged a purported blockchain-marketplace company and its founder with conducting a fraudulent ICO”.
Why was Opporty charged?
It seems like Opporty International, Inc. and its founder Sergii Grybniak had raised approximately $600k from approximately 200 investors during an ICO that took place between September – October 2018. The ICO had actually been an unregistered securities sale and on top of that, it was advertised as “SEC compliant”, “SEC registered”, and “SEC regulated”.
The SEC’s complaint further alleges that Grybniak and Opporty engaged in other deceptive acts, including misappropriating third-party content without approval or attribution, to create the false impression that actual users of Opporty’s platform had created such content.
A violation of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities and Exchange Act of 1934, as well as Grybniak charger for aiding and abetting Opporty’s violations.
Opporty had also claimed to have more than 17 million businesses in its database when in reality it only purchased a third-party catalog. That’s in addition to claims related to onboarded thousands of verified providers to do business on the platform, according to Cointelegraph.
ICO crackdown continues
Recently, the SEC had been very active in its actions against other ICO that managed to raise much more capital. The litigation of the $1.7 billion Telegram ICO and KIK’s $97 million ICO are just two of the major projects that are now under the radar of the US regulator.
Because of the regulatory crackdown, the cryptocurrency industry is currently going through some major changes. We’ve gone from ICOs to IEOs and now to STOs. Traditional cryptocurrencies seem to be losing ground against stablecoins, due to the continued high volatility.
Even though SEC’s actions are generally perceived in a negative way by the crypto industry, we must acknowledge the need for standards and regulations in the industry. Just because the blockchain has high potential, it does not mean companies using it can do whatever they want.
During the late 2017 – beginning of 2018 ICO boom, blockchain-based startups had crossed a red line many times and now the payday seems to have come. The SEC looks committed to crack down on all fraudulent ICO, no matter of their size, as long as the Securities Act had been breached.