Crypto ICO Price Continues to Fall, Likely Due to Growing Regulatory Pressure
Blockchain and crypto projects that raised tens of thousands of dollars through tokenized crowdfunding means are currently lining up to return their funds to their initial investors. As apparently, they weren’t permitted to increase funds in the first location.
The US regulator found irregularities in the way companies raised funds, largely by approaching typical Joes rather than innovative, accredited investors to raise capital. As a result, the commission issued substantial penalties against the accused blockchain projects, including the order of returning capital to the investors.
It might be one of the reasons why the most real startups could see massive declines in their own token values. The capital that endorsed those unregistered assets might no longer be there to return them. Even the hedge fund managers that integrated them in their crypto portfolios at the very first place are now skeptical of the own future.
“Of these projects, roughly a third (approximately 10 percent of the portfolio) is live and functional and, even while they might technically persist without further development, ending advancement would hinder their progress.”
The capital could also wind up paying the invoices for offering unregistered securities within their portfolio. In such a scenario, Pantera, which posted profits of 60 percent amid a crypto crash, therefore might need to shell out a substantial portion of their accumulation as a refund.
An instance that guides into such a situation is CoinAlpha Advisors LLC. The fund manager last week was slapped with a $50,000 fine from the SEC after the regulator captured it selling unregistered securities.
The situation linked to the future of the US ICO sector is very likely to get worse. It would be difficult to forecast the coins which have made in the SEC’s hitlist, but the developing scrutiny would deter new startups to launch businesses in the gray field of cryptos. That said, the market could be eyeing further reductions since the new year approached, indicating a head down towards the best-possible bottom.
Nevertheless, a very clear washout of unregistered ICOs would finally make space for a new wave of startups. With licensed investors taking them for a ride, there could be fewer cases of frauds which had hampered the growth of the ICO sector, anyway. A crash followed by a stable uptrend is the ideal outcome of all this.