The big news from the SEC came out last week that it had settled
registration charges with two ICOs, Airfox and Paragon, after publishing its guidance on ICOs in 2017. Airfox raised $15 million in its ICO, and Paragon raised $12 million.
The SEC ruled that each company’s token was a security, and these two companies broke SEC law because they failed to comply with existing rules governing the registration of securities. In response, both companies agreed to reimburse harmed investors in their ICOs, pay $250K in fines and register their tokens as securities.
It looks like the days of quick returns on ICOs and selling to the public is over. ICOs are now considering tokens as possible securities and are taking a few steps to protect themselves:
1) Selling only to accredited investors
2) Waiting at least a year from the private sale to the token generation event to comply with traditional securities laws
3) Excluding US investors