The US Securities and Exchange Commission (SEC) cracks down on crypto venture capitalists, with three crypto VCs reportedly subpoenaed in 2024.
SEC Turning Its Attention To Crypto VCs
SEC TARGETS VENTURE CAPITAL FIRMS IN CRYPTO CRACKDOWN
The SEC has subpoenaed at least three venture capital firms over the past year, demanding contracts for any token deals they’ve been involved in.
The agency is particularly concerned about whether these VCs overlooked red… pic.twitter.com/C3BospiFpP
— Mario Nawfal’s Roundtable (@RoundtableSpace) August 9, 2024
Reportedly, DL News’s source claimed that three crypto VC firms received identical subpoenas from the SEC. The subpoenas request all contracts of digital asset deals made with investors. The same source claims that the SEC is investigating whether crypto VCs are acting as statutory underwriters.
DL News was shown some of the content from the subpoenas, with one being titled “in the matter of certain crypto asset offering intermediaries”. It read, “The staff of the US SEC is conducting an investigation relating to the above-referenced matter to determine if violations of the federal securities laws may have occurred.”
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How VC Investment In Crypto Projects Works
VCs regularly invest in new crypto projects and are rewarded with large quantities of the project tokens. Generally, the VCs receive a percentage of the tokens up front, with the rest being unlocked in varying scheduled unlocks.
Per the current regulations, new crypto projects are authorised by the SEC to sell unregistered securities in the form of tokens to accredited investors (VCs). However, it is not allowed for projects to sell tokens directly to the general public.
Ari Paul Called This Crackdown On VCs Back In July
The development follows earlier hints that the SEC crackdown on crypto is growing.
In July, Ari Paul, CIO of BlockTower Capital, said on the ‘Unchained’ podcast that the agency is investigating crypto VCs. Paul did not name any names regarding the targets of the SEC, nor did he speak on the nature of the investigations.
JUST IN: 🚨 The SEC is now going after crypto VCs, according to the BlockTower Capital founder.
Speaking on the Unchained podcast, Ari Paul the chief investment officer of BlockTower Capital, said the SEC has launched a “bunch of investigations into VCs for acting as… pic.twitter.com/EMtmHwkzRv
— DΛVID 🟢 (@DavidShares) July 5, 2024
Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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