The Securities and Exchange Commission has launched a broad investigation into the companies and financial professionals behind many recent initial coin offerings, or ICOs.
The investigation was first reported by the Wall Street Journal and independently confirmed by NPR. According to the Journal, the SEC has sent out "dozens of subpoenas and information requests" in recent months to companies and individuals who have facilitated ICOs.
Initial coin offerings are a way for upstart cryptocurrency firms to raise large amounts of money. In a typical ICO, inside investors are offered the first chance to buy a new cryptocurrency before it hits the market.
The companies behind many of these ICOs say they are a safe, legal way to raise capital.
But the SEC is not so sure. NPR reported last month that the regulatory agency was looking to crack down on the offerings. And new research released by Ernst & Young revealed that investor losses from botched ICOs have reached almost $400 million in recent years.