Blockchain and Crypto projects that managed to raise millions through tokenized crowdfunding will be soon returning their capital to the original investors. Since the process of fundraising failed to comply with the regulations.
The Securities and Exchange Commission (SEC) has targeted startups that have reportedly violated existing securities laws. The US regulator discovered inconsistency in the way companies raised capital. Therefore, the commission has taken strict actions against the accused blockchain projects. These projects have been ordered to return funds to the investors.
This could be one of the main reasons why genuine startups could see a substantial decline in their token value. The funds that supported these unregistered assets may no longer be available for the refund.
Furthermore, the funds could be held accountable for incurring the bills for offering unregistered securities in their portfolio, resulting in shelling out a notable chunk of their accumulation as a refund. The best example to understand such a situation is CoinAlpha LLC, whose fund manager was fined with a whopping $50,000 by the SEC after being caught selling unregistered securities.
The future of ICO industry in the United States is likely to get worse. The industry has been taking unpredictable twist and turns. It is believed that the market could see further losses as the new year approaches, falling to the best-possible bottom.
However, the extermination of unregistered startups would eventually clear the way for new startups, that may possibly gain the trust of accredited investors, resulting in fewer cases of frauds that would otherwise stall the growth of the ICO sector.