One of the leading Crypto Hedge Funds, Pantera Capital Management, which invests in ICOs and blockchain projects, recently announced that it might have to refund some of their investors as almost one-fourth of their funded projects could fail to meet the Securities and Exchange Commission’s laws in the US.
This is another potential blow to the crypto industry after a report claimed most of the ICOs that were funded in 2017 or the first two quarters of 2018 are still without any viable blockchain products or are still struggling to find users for their dApps. This new announcement by Pantera, a California-based hedge fund, will only deteriorate investors’ confidence in ICOs further.
The rising interest of SEC in enforcing investor protection laws within digital currency and blockchain industry have started to ramp up as of late. SEC recently charged two ICOs for violating the law as both ICOs received investment from non-accredited investors after they raised millions of dollars.
Paragon Coin, one of the ICOs that was charged by SEC is already thinking of refunding their investors. The problem here is, SEC was not very interested in digital currency domain until recently, which means most of the ICOs launched in 2017 didn’t register with SEC. Most of these also sold their tokens to anyone who was interested in an investment, instead of only accredited investors. However, SEC now sees this as a breach of regulations and laws.
Even though Joey Krug and Dan Morehead, the chief investment officers at Pantera, claim that the large number of ICOs they invested in are not affected, 25% of the ICOs are still at risk, as these ICOs sold liquid tokens to investors in the US, without using regulation S or D, which is a breach of SEC law.