• Gary Gensler, the Chair of the U.S. Securities and Exchange Commission (SEC) is warning about crypto industry teeming with criminals and illicit activities.
• According to Gensler, most crypto tokens are securities and fall under SEC purview, so intermediaries must comply with securities laws.
• The SEC has recently filed multiple charges against Binance and Coinbase for allegedly violating federal securities and investor protection laws.
Crypto Industry Teeming With Hucksters, Fraudsters, Ponzi Schemes: Report
Gary Gensler, Chair of the U.S. Securities and Exchange Commission (SEC), warned that the crypto industry is teeming with criminals and illicit activities during a Piper Sandler Global Exchange & FinTech Conference in New York City. He likened it to the 1920s when there were no federal securities laws in place yet.
SEC’s Stance on Crypto Tokens
Gensler reiterated that most digital tokens are considered as “securities” by the SEC so intermediaries must comply with relevant regulations as well. He noted that asset providers should register with the SEC to prevent investors from getting caught up in failing projects.
Recent Charges Against Exchanges
The SEC has recently filed multiple charges against top cryptocurrency exchanges Binance and Coinbase for allegedly violating federal securities laws as well as investor protection regulations. It accused Binance CEO Changpeng Zhao of fraud while Coinbase was charged for operating without registration as an exchange, broker or clearing agency.
Implications on Investors
Gensler’s statement puts emphasis on protecting investors from falling victim to imploding crypto projects by abiding to rules set by the SEC such as preventing fraud and manipulation through proper disclosures; segregating customer assets; avoiding conflicts of interest; oversight by a self-regulatory organization; and routine inspection by the SEC itself.
This serves as another reminder that investing in cryptocurrencies carries high risks due to market volatility, regulatory uncertainty, lack of liquidity among other factors which makes it essential for investors to do their due diligence before making any investments in this market space