Share this article
SEC's Crypto Czar Says Exchanges That List IEOs May Face Legal Risks
Certain initial exchange offerings (IEOs) may be breaking U.S. securities laws, an SEC official said.
Updated Sep 13, 2021, 9:11 a.m. Published May 13, 2019, 9:36 p.m.
Certain exchanges that facilitate initial exchange offerings (IEOs) may be breaking U.S. securities laws, a top Securities and Exchange Commission official has said.
Speaking Monday at CoinDesk's Consensus 2019 conference in New York, Valerie Szczepanik, the SEC's senior advisor for digital assets and innovation, said cryptocurrency exchanges that facilitate token sales for a fee likely meet the legal definition of securities dealers if the issuer or any of the buyers are based in the U.S.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
As such, they need to follow the registration and licensing requirements for broker-dealers, alternative trading systems (ATS) or national securities exchanges. And if they're not, they're going to be in hot water, according to Szczepanik.
“Platforms seeking to list these tokens for a listing fee or bring buyers to the table for issuers are probably engaging in broker-dealer activity," Szczepanik said during a chat with Bloomberg reporter Matthew Leising, adding:
"If they are not registered they will find themselves in trouble in the U.S., if they have a U.S. issuer or U.S. buyers, if they are operating on the U.S. market."
Szczepanik did not mention any specific exchanges. However, Binance, OKEx, Bittrex and KuCoin are among the exchanges that have facilitated IEOs, and these transactions are believed to be generating millions of dollars in fees for such platforms.
The most famous platform for IEOs is Binance's Launchpad, which in January hosted a public sale of BitTorrent tokens, raising $7.4 million for the file-sharing service owned by Tron.
Szczepanik said a previous case brought by the SEC last year against TokenLot "was instructive in this regard."
"There was a platform that was assisting to bring buyers to ICOs," she said. "In this case, there was an enforcement action, as the platform was acting as a broker-dealer and participating in the distribution with a violation of the registration provisions.”
Watch CoinDesk's IEO explainer below:
Valerie Szczepanik, right, at Consensus 2019 image via Anna Baydakova for CoinDesk.
More For You
What to know:
- As of October 2025, GoPlus has generated $4.7M in total revenue across its product lines. The GoPlus App is the primary revenue driver, contributing $2.5M (approx. 53%), followed by the SafeToken Protocol at $1.7M.
- GoPlus Intelligence's Token Security API averaged 717 million monthly calls year-to-date in 2025 , with a peak of nearly 1 billion calls in February 2025. Total blockchain-level requests, including transaction simulations, averaged an additional 350 million per month.
- Since its January 2025 launch , the $GPS token has registered over $5B in total spot volume and $10B in derivatives volume in 2025. Monthly spot volume peaked in March 2025 at over $1.1B , while derivatives volume peaked the same month at over $4B.
More For You
XRP Faces Downside Risk as Social Sentiment Turns Wildly Negative
The turn in crowd mood comes after a two-month slide of roughly 31%, leaving the token vulnerable to further downside if risk appetite weakens across majors.
What to know:
- XRP's price approached the $2 mark as social sentiment around the token turned sharply negative, according to Santiment data.
- The token has experienced a 31% decline over two months, making it vulnerable to further losses if market risk appetite weakens.
- Santiment's sentiment model indicates XRP is in a 'fear zone,' where negative commentary significantly outweighs positive talk, potentially influencing market positioning.
Top Stories
