Overstock.com, which was the first major retailer to accept Bitcoin (BTC) in 2014, has seen its shares fall after its crypto subsidiary tZERO reported that the US Securities and Exchange Commission (SEC) was looking into its Initial Coin Offering (ICO), according to tZERO’s Mar. 1 “Confidential Private Placement Offering Memorandum.”

Overstock had experienced a share price climb in October of last year to around $34, as more investors were becoming excited about Blockchain and crypto. Overstock is currently trading at around $56 after falling more than 10% on Mar. 1.

On Feb. 28, anonymous sources had told the WSJ that the SEC had launched a probe into cryptocurrencies-related businesses, with as-of-yet unknown numbers of information requests and subpoenas already delivered to crypto companies. The SEC has also recently suspended trading of three companies while investigating their cryptocurrency and Blockchain assets.

Under a section marked “Legal Proceedings,” the tZERO filing records that the SEC’s Division of Enforcement had told the company in February that it was conducting an investigation and had asked for the voluntary handover of “certain documents related to the Offering and the Tokens in connection with its investigation.”

The March 1 filing also contains a list of “Cautionary Statements” about the future, including the stipulation that there “can be no assurance that the Tokens will ever be issued and Tokens, if issued, will be subject to extensive legal and contractual transfer restrictions to comply with our regulatory obligations.” The list also includes mentions of the “uncertain nature” of the tax treatment, application of US law, and regulatory regime of these securities.

The filing reports that the company is cooperating with the SEC in its investigation, but adds that

“While the SEC is trying to determine whether there have been any violations of the federal securities laws, the investigation does not mean that the SEC has concluded that anyone has violated the law. Also, the investigation does not mean that the SEC has a negative opinion of any person, entity, or security.”

Patrick Byrne, the CEO of Overstock, told the Wall Street Journal (WSJ) yesterday, March 1, that the SEC “clearly doing a sweep of this whole industry,” a move that he “actually supports:”

“The more of a regulatory spotlight they bring, the better we look.”

According to Byrnes, the SEC has been “in the dark” about ICOs, and most offerings are actually securities, even if they don’t market themselves as such:

“We all know they’re securities.”

Overstock had filed for its ICO to be classified under Regulations D and S instead of as a traditional securities filing. This means that US citizens must be accredited investors (net worth that exceeds $1 million, or an annual income of at least $200,000) to have invested in the ICO, and that offshore transactions must not involve US citizens.

The SEC filing reported that the ICO, which was launched in December 2017, raised $100.6 mln from 1,100 investors, and that $250 mln is the maximum amount of tokens to be issued. TZERO’s website says that the “Private Offering” had been extended until March 30, 2018.

In January of this year, the Eastman Kodak Company’s announcement that they would be releasing their own ICO under the same “exempt offering” guidelines saw doubling of their stock price, but its launch date was postponed in order to finish verifying the status of their accredited investors.