SEC Bulletin on The DAO and Crypto ICOs - Concludes Many are Securities, Subject to Federal Securities Laws

Many folks will remember The DAO attack last summer that drained the then largest Ethereum smart contract of millions of dollars.

After nearly a year of investigation, the Securities and Exchange Commission in The United States has today, July 25th, concluded the following:

The SEC's Report of Investigation found that tokens offered and sold by a "virtual" organization known as "The DAO" were securities

According to promotional materials, The DAO would earn profits by funding projects that would provide DAO Token holders a return on investment.

The SEC will set a strong precident going forward for future initial coin offerings in the United States; token sales like this are securities and as such are subject to the SEC's jurisdiction.

Though after determining this, the SEC has concluded they will not to need to proceed with any legal charges in The DAO case:

In light of the facts and circumstances, the agency has decided not to bring charges in this instance, or make findings of violations in the Report, but rather to caution the industry and market participants

But aside from non-intervention in this case, they caution the market to be careful and give notice they would like to help foster and grow the market:

The SEC is studying the effects of distributed ledger and other innovative technologies and encourages market participants to engage with us," said SEC Chairman Jay Clayton. "We seek to foster innovative and beneficial ways to raise capital, while ensuring – first and foremost – that investors and our markets are protected.

It is clear from their report is that the SEC intends to be watching, however, for the time being they will continue to leave the market to its own devices.

Do you believe they made the right decision? Post your answers in the comments below and hit the vote button.

The complete statement on The DAO can be found at the SEC's website here as press release 2017-131.

The full and detailed 18 page report on The DAOsaster that accompanies this release can be found here on the SEC's website as well.

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