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SEC issues notice seeking forensic tools for monitoring blockchains

The U.S. Securities and Exchange Commission (SEC) is looking for forensic tools to more closely monitor the crypto industry, particularly with regard to blockchain smart contracts.

The regulator issued a notice on July 30, requesting solicitations from companies that might provide software that can analyze blockchain code and the distribution of token sales funds. Necessary features of the tool would be "purchase and/or sale restrictions" and "token or coin sale specifications," according to the notice.

The open request is further indication of the SEC's increased efforts to determine whether crypto companies have violated securities laws by distributing tokens to investors prior to registering with the SEC. Telegram, Block.one and Kik are among the crypto-exchanges that have recently faced legal action by the regulator.

Mitigating exposure

While initial coin offerings (ICOs) continue to be an effective and efficient way of participating in investment opportunities, the crypto-markets are less regulated than traditional markets, and the SEC is undoubtedly anxious to get a foothold.

If you or your firm is under investigation for possible SEC violations, do not hesitate to contact a securities law attorney with extensive experience in civil and criminal cases involving these matters. The securities law attorneys at Ford O'Brien represent clients in New York and Nationwide.

Source: Decrypt, "SEC on the hunt for more tools to keep a closer eye on crypto," Aug. 4, 2020

Source: beta.sam.gov, "Distributed ledger technology (DLT) smart contract analysis tool," July 30, 2020

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