It’s no secret that the relationship between the and the crypto industry is akin to that of a dog and a feral cat.

However, an interesting further illustrates that frayed relationship and the fact that the SEC will not make it any easier for crypto to break out of its tailspin.

According to the story, the SEC did not give approval for public listings to crypto-focused companies such as , and . The companies all were looking to go public through mergers with special-purpose acquisition companies.

While the SEC did not stop any of the firms from merging, the slow pace of the review process and extensive questioning seemed to hurt their efforts to list, per the report.

Circle’s plight

Boston-based Circle’s effort to go public certainly caught our eye before finally reaching its long, winding conclusion last month.

Circle’s proposed merger with blank-check firm Concord, which is backed by former boss , has been its own long and winding story.

The company — an issuer of USD Coin, a type of stablecoin — announced in July 2021 it would merge with Concord in a deal that would value the company at $4.5 billion. However, USD Coin’s circulation quickly doubled and, in February of last year, Circle terminated its previously announced merger agreement and agreed to new terms that doubled the crypto company’s valuation to $9 billion. 

That deal was expected to close last month, but instead the company called off its proposed merger agreement.

According to the report, the SEC raised more than 100 questions with Circle’s disclosures about the SPAC agreement.

Again, none of this comes as a surprise, but it is significant. VCs and other institutional Investors are likely more wary than ever about backing crypto startups. If it becomes clear one of the paths to a liquidity event is blocked by an agency such as the SEC, the appetite to invest in the space becomes even less.

In a market where it likely will be hard to raise funding for crypto-focused startups, the SEC’s actions may increase that difficulty level even slightly more.

Further reading:

• Funding To Web3 Startups Plummets 74% in Q4
• FTX Collapse Will Reverberate Throughout The VC World For A Long Time
• How VCs Invest In Crypto Will Be Changed By FTX’s Spectacular Fall
• Semafor To Buy Back Bankman-Fried’s Stake — Report

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Late this week, two pieces of news involving bad actors in the crypto space came to light that are worth discussing.

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First, the with, and I kid you not,  and for “unlawfully touting coin offerings.” In other words, two celebrities just got dinged for ICO-related shenanigans. And, the FBI arrested Jared Rice, who raised $4 million in what appears to be an ICO based on fictitious premises.

My first question is why go after these three individuals first? After all, if celebrities are going to get in trouble for repping various token sales, there are more to go through. And, Mr. Rice’s AriseCoin ICO never made my radar; surely there are bigger targets waiting in the wings.

Regardless, the punishments range from financial to dozens of years in prison. In the case of the boxer and the DJ:

And, , the ICO founder in question is even more trouble, having been “charged with three counts of securities fraud and three counts of wire fraud.” He could get over 100 years in prison. That’s life.

All this is to underscore that after the Great ICO Boom (now somewhat over), there’s a lot of loose ends left untied. I would expect to see even more of this sort of legal action in the coming months.

Which isn’t bullish for crypto as a whole, and must be especially tough news for the crypto space and its various constituents who are under steep price pressure in recent weeks. But, like with any boom times, rising levels of fraud are a sign of the top. And here we’re seeing the fraud shake out after the peak.

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This decision seems to have been in the works for some time. SA¹ú¼Ê´«Ã½ News reached out to Twitter on February 9th of this year and was told that the company was still assessing its stance on cryptocurrency ads at that time.

More than one month later, with the story from Sky News and a confirmation from a well-informed source, it looks like the result of that rumination will be to bring down the ban hammer.

The Great ICO Ban

Twitter isn’t alone either, as many tech giants are foregoing ad revenue ostensibly in the name of protecting users from financial exploitation. major platforms to ban blockchain ads back in January. Last week, Google that it would ban ads for certain financial products, including binary options and “[c]ryptocurrencies and related content” including wallets, ICOs, exchanges, and trading advice.

According to , companies in the crypto space are now “shut out of 70 percent of the world’s digital ad market,” when accounting for Facebook, Google, Alibaba, Baidu, and Tencent’s recent bans.

This may not bode well for existing cryptocurrency companies or upstarts looking to raise an ICO, a popular fundraising mechanism among those looking to finance blockchain projects.

In previous reporting and analysis, SA¹ú¼Ê´«Ã½ News found that ICOs delivered at least 3.5x more capital to blockchain startups than traditional venture capital funding rounds have since 2017. In other headwinds news, the Securities and Exchange Commission (SEC) . And, in an effort to comply with existing regulations, °ä´Ç¾±²Ô¶Ù±ð²õ°ìÌýsuggests that many founders are . The exemption stipulates a 12-month lock-up period where securities can’t be traded, which will slow investors’ sprint to liquidity at cryptocurrency exchanges—one of the few merits tokens claimed over traditional equity shares.

Taken together, market and regulatory forces may finally start to cool the heels of this very hot sector.

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