- US SEC Chairman Gary Gensler hopes that pending charges against Samuel Bankman-Fried sends a message to the crypto community.
- Gary Gensler argues that cryptocurrency issuers and exchanges need to ensure compliance with existing securities law.
- The US financial regulator announced that it had settled civil fraud charges with two former executives of the bankrupt FTX exchange.
US SEC, the Securities and Exchange Commission believes that existing rules are adequate for cryptocurrencies. Gary Gensler, the chair of the SEC argues that the crypto community needs to ensure that firms comply with existing securities laws. FTX exchanges’ swift collapse has prompted urgent calls in Washington for legislation to rein in the digital asset industry.
Also read: US SEC calls FTT a security, Sam Bankman-Fried former associates plead guilty
US SEC Chair Gary Gensler argues FTX exchange collapse highlights need for compliance
US SEC, an independent agency of the United States federal government believes that existing crypto rules are adequate but issuers and exchanges need to ensure compliance. The Chairman of the financial regulator said that existing rules are adequate for cryptocurrency firms.
Gary Gensler, the US SEC Chair argues that pending charges against FTX exchange set an example for the community about the need of having operations compliant with existing securities laws.
The collapse of the bankrupt FTX exchange founded by Samuel Bankman-Fried poses a warning to crypto issuers and exchanges that are not registered with the SEC. Gensler believes these firms could soon find themselves facing enforcement actions.
The SEC settled civil fraud charges with SBF’s aides Gary Wang and Caroline Ellison, two former executives of the FTX empire. Gary Wang is a co-founder of the cryptocurrency and Ellison is the chief executive of FTX’s trading arm, Alameda Research, that used billions in customer funds to back its risky trades.
SBF’s aides pleaded guilty to criminal fraud charges filed by federal prosecutors in their investigation of the cryptocurrency exchange. The now bankrupt trading platform once ranked among the world’s largest cryptocurrency platforms in the world.
The platform’s collapse kicked off a series of investigations by the Justice Department and the SEC focused on whether the exchange commingled funds with Alameda Research, another business co-founded by SBF.
Gensler said,
Financial history would tell you that most of these tokens [native tokens of crypto exchanges] will fail. [Insiders] sell the public on an idea while they’re potentially fraudulently pumping up the stock. This leads to distorted incentives and puts the public further at risk of the token not being properly registered and having proper disclosures and complying with the various provisions of the securities law about anti-fraud and anti-manipulation.
The SEC Chairman said he supports legislation that regulates cryptocurrency sectors like stablecoins. The US Securities law is robust and covers much of the activity in the crypto ecosystem, not limited to tokens, but particularly including intermediaries in cryptocurrency securities.