The reason for the possible refund was linked to a statement as well as comments made by the U.S SEC, that many ICOs which launched in 2017 have violated “securities law” and will have to return funds to investors.
Therefore, Pantera Capital is going to return the funds to investors if the ICOs they invested the pooled funds into is charged by the SEC, a situation that looks very likely to happen. Start-up crypto firm, Paragon has already been ordered to do so by the regulators.
As per the report, 25% of the Pantera ICO hedge fund will possibly be affected since the projects cannot carry on with their product development under the “securities” tag.
Pantera’s co-chief investment officers, Dan Morehead and Joey Krug said that while a majority of their portfolio will not be affected by the SEC decision, “approximately 25 percent of (hedge) fund’s capital is invested in projects with liquid tokens that sold to U.S. investors without using Regulation D or Regulation S.”
“If any of these projects are deemed to be securities, the SEC’s position could adversely affect them,” he added.
ICOs Are Adopting New Model Called STOs
With ICOs largely falling out with existing securities laws, a new model known as Security Token Offerings (STOs) is gaining popularity in the crypto industry.
Security Token Offerings (STOs) allow projects to issue their crypto token to investors just like “traditional securities,” thus guaranteeing that no civil laws are defiled. With several projects such as CapBridge already aligning itself with this fundraising model, 2019 is being touted as the year when security tokens come to the mainstream.