The Securities and Exchange Commission (SEC) has proposed a new way for crypto projects to raise as much as $5 million from the public without providing investors a single financial statement.

There would be no per-investor limit. Non-accredited investors could participate. General solicitation would be allowed. The securities generally could be resold without the one-year restriction that applies to securities sold under Regulation Crowdfunding. The issuer would not need to conduct the offering through a registered crowdfunding platform.

This proposal raises an uncomfortable question: How much protection does an antifraud law provide when many of the mechanisms designed to identify problems before investors hand over their money have…