Hedge Funds Said to Draw SEC Scrutiny in Crackdown on Crypto

Wall Street’s main regulator has a new worry in its race to keep tabs on the cryptocurrency craze: hedge funds.

The Securities and Exchange Commission is examining the business practices of a cadre of funds set up to invest in cryptocurrencies and initial coin offerings -- digital-token sales that give buyers stakes in companies, said three people with knowledge of the matter. Since hedge funds manage money for outside investors, the SEC wants to make sure firms are appropriately valuing holdings and keeping clients’ assets safe.

As part of its review, the SEC recently sent a number of requests ...