Gary Gensler decries crypto industry after Sam Bankman-Fried conviction

US Securities & Exchange Commission (SEC) Chair Gary Gensler has called into question the integrity of the cryptocurrency industry, saying it is full of fraudsters and manipulators. It comes barely a week after former FTX CEO Sam Bankman-Fried (SBF) was found guilty on seven counts of charges bordering along fraud.

Also Read: FTX founder Sam Bankman-Fried found guilty on all counts, including stealing $8 billion from users

Gary Gensler questions crypto industry’s integrity

Gary Gensler says the cryptocurrency industry is “rife with fraud and manipulation,” according to a report in Bloomberg. The leading regulator questioned the integrity of the digital asset industry at large. His comments come during the seventh annual DC Fintech week as he testified before the Senate Banking, Housing & Urban Affairs Committee. 

If they were to live up to the investor protection built into their current laws, it would help investors. But right now, unfortunately, there is significant non-compliance, and it's a field which is rife with fraud, abuse and misconduct.

As if to allude to the arrest and conviction of SBF, Gensler explained that it is not just about a single circumstance or one notorious fraudster, but rather multiple notorious fraudsters.  

Further, he explained how the agency determines which enforcement actions to pursue and how saying that resources are always a critical consideration. Gensler cited “a lot of complaints…..and a lot of bad actors.” 

He added that accountability remains critical for all players, while high impact cases require a keener eye, with “gatekeepers” or enablers being a key focus of the SEC.  

Gensler revealed having commissioned “staff to look at every way to get these platforms inside the investor protection remit." In his opinion, failure by trading platforms to come into the regulated playground would default to another year of risk to the public.  

It is worth mentioning that the financial regulator has brought around 760 enforcement actions in the 2022 financial year, doubling its manpower in the Crypto Asset & Cyber Unit division.

More importantly, Gensler asked what the use case was for the more than 20,000 active tokens in the market today.

Notably, this is not the first time Gensler is calling out noncompliance in the cryptocurrency market. His agency has gone after crypto firms and their executives in the past, case in point, Binance and its CEO, Changpeng Zhao (CZ).  The Coinbase exchange has also fallen victim.

Gensler addresses spot Bitcoin ETF

When asked about spot Bitcoin exchange-traded funds (ETFs) and whether any applications had made any leeway, the Chair acknowledged receipt of multiple filings and that the SEC was scrutinizing them.

Chatter about ETFs seem to have waned, indicated by the hesitance of Bitcoin price to move forward. All eyes are peeled for early 2024, when the markets anticipate a decision from the Commission.

Meanwhile, Gensler has been facing backlash from the crypto community, with some urging that his salary be reduced to a standard $1 annual pay. Others christen him a “despotic chairman,” arguing that the market ought to be protected from the nation's chief financial market overseer.