Fraud ICO requires a thoughtful approach

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Speaking at the Securities Enforcement Forum on Thursday, SEC Division of Enforcement co-chair Stephanie Avakian took the opportunity to give an overview of the mission of the unit, emphasizing once again that token sales, the process by which startups use custom cryptocurrencies to raise funds.

The cyber unit, first announced at the end of last month, said it would target misconduct made using a dark network, especially where cryptocurrencies such as bitcoin are used.

Thus, Avakian said that the cyber unit was created to consolidate the experience of the regulatory body in the field of cybercrime and include an emphasis on technology of blockchain, in particular, on proposals with initial coin offerings.

Although blockchain technology can be used for legitimate fundraising, it can also be abused, she said, noting that "like many legitimate ways to attract capital, the popular appeal of virtual currency and blockchain technology can be an attractive means for fraudulent behavior."

Referring to a previous SEC report, which states that digital tokens would be considered securities ability under U.S. law, she ultimately stated that the blockchain needs a "consistent, thoughtful approach."