NASDAQ President and CEO Adena Freidman said that Initial Coin Offerings have the potential to defraud retail investors due to lack of regulatory oversight, transparency issues and not enough public information available about the projects.

Speaking at the Future of Fintech Conference on Wednesday 20th June, the exec noted that first time investors are more likely to be duped by fraudulent schemes. She previously said that NASDAQ would consider operating a digital currency exchange once the market matures.

Companies offering ICOs raised more than $9 billion year-to-date. However, this unregulated fundraising process creates serious risks for investors.

Freidman said:

“To make it no rules at all, when companies can just willy-nilly take people’s money and offer no information at all, with no governance, that sounds to me like you’re taking advantage of people.”

Companies regulated by the Securities and Exchange Commission (SEC) must inform the public about their IPOs and other fundraising methods.

In the case of ICOs, none of the federal agencies exercise any oversight. The exec said that these coins are being bought by retail investors and added:

“I have real concern on lack of transparency, oversight, and accountability that these companies have as they’re going out to raise capital through an ICO.”

Friedman said that first-time investors are lured into these projects and have a higher chance of being exposed to serious risk of capital loss. They have no access to information about these projects. Still, companies like Block.one raised over $4 billion in an ICO, without even a live project.

The SEC is gearing up to curb malpractices in the industry by issuing subpoenas to firms involved in price manipulations and shutting down some companies backed by pop culture icons like DJ Khalid and Floyd Mayweather.

SEC Chairman Jay Clayton, recently, said that an ICO classifies as security. Freidman seconded his views noting that ICOs are “really securities offerings.”

In April this year, Friedman hinted that NASDAQ could operate a crypto exchange once the market “matures.” Until then, they would like to be “partners.”

Following this, NASDAQ collaborated with Gemini, which is an exchange founded by the Winklevoss brothers, early Bitcoin investors. Gemini uses NASDAQ’s surveillance technology to provide a “rules-based marketplace” to the users.

Retail Investors Should Be Careful With ICOs, NASDAQ CEO Warns was originally found on [blokt] - Blockchain, Bitcoin & Cryptocurrency News.

244 +