New SEC Probe Of ICO Issuers And SAFT Structure

The Wall Street Journal recently reported that the SEC has issued dozens of subpoenas and information requests in connection with sales and pre-sales of initial coin offerings. As we have previously noted, the SEC Enforcement Division's Cyber Unit has been targeting ICOs in recent months, and the SEC has provided a number of public statements raising concerns regarding the ICO and cryptocurrency markets. It now appears that the SEC's regulatory efforts in this area may be ramping up.

According to the WSJ, the SEC's current scrutiny is focused in part on "simple agreements for future tokens," or SAFTs. SAFTs are one type of offering structure designed to insulate issuers of digital tokens from the risks of non-compliance with the federal securities laws. A typical SAFT structure will involve the sale of tokens for future delivery, with the sale made at a time when the tokens have either not yet been created or have not yet been issued due to the