US SEC Initial Exchange Offerings (IEOs) – Investor Alert

Initial exchange offerings (IEOs) are a recent development in the rapidly evolving digital asset space.  IEOs are similar to initial coin offerings (ICOs) in that they are initial offerings of digital assets (e.g., coins or tokens) to raise capital.  However, IEOs are being touted as an innovation on ICOs because they are offered directly by online trading platforms on behalf of companies—usually for a fee—to provide immediate trading opportunities for the digital assets.  These online trading platforms, which are typically not registered with the SEC and which may improperly refer to themselves as “exchanges,” may also claim to perform due diligence or other quality assessments of the IEOs. 

Is the IEO a securities offering?

There are important issues investors should be aware of before investing in an IEO.  As in the case of ICOs, depending on the facts and circumstances of the offering, the offering may involve the offer and sale of securities.  This means the IEO may be subject to registration requirements that apply to offerings under the federal securities laws.  Among other things, registration means that the company offering the digital asset has to provide important disclosures about itself, its business, the digital asset offered, and the terms of the offering to investors. 

Read more on the US SEC website here…

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