Overstock Falls As SEC Probes 'Dozens' Of Companies Involved With Cryptocurrencies

Overstock.com Inc OSTK, an online retailer who recently expanded into blockchain technology, saw its stock fall more than 10 percent Thursday morning after confirming it may face an SEC investigation.

What Happened

The Securities and Exchange Commission sent subpoenas and requests for information to multiple technologies companies and financial advisors who operate within the cryptocurrency market, The Wall Street Journal reported. While the WSJ report is attributed to "people familiar with the matter," it does follow "a series of warning shots" from regulatory bodies which put multiple companies on notice over the past few months.

Overstock confirmed in a regulatory filing that its tZero initial coin offering (ICO) is subject to an SEC review. The company did say it'ss not aware of a legal proceeding which would have an "adverse impact" on its business and an investigation doesn't imply the regulatory body has a "negative opinion of any person, entity, or security."

Why It's Important

Dan Gallagher, an SEC commissioner from 2011 to 2015, told WSJ we are merely "seeing the tip of the iceberg" and "there is going to be a ton of enforcement activity." The cryptocurrency market and unregulated token or coin offerings are "the freaking Wild West -- it's 'Wolf of Wall Street' on steroids."

What's Next?

WSJ noted many companies with pending coin offerings have put their plans on hold, according to Robert Cohen, head of the SEC's cyber enforcement. Most of the subpoenas the SEC may have issued in recent weeks could result in a notable upturn in enforcement activity.

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