- Securities and Exchange Commission Chairman hopes pending charges against Sam Bankman-Fried send message to crypto community.
- Gary Gensler argues cryptocurrency issuers and exchanges need to ensure compliance with existing securities law.
- US financial regulator announced it had settled civil fraud charges with two former executives of bankrupt FTX exchange.
The US Securities and Exchange Commission (SEC) 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 exchange's swift collapse has prompted urgent calls in Washington DC for legislation to rein in the digital asset industry.
US SEC Chair argues FTX exchange collapse highlights need for compliance
The US Securities and Exchange Commission, 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 argues that pending charges against the 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 Sam 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 Sam Bankman-Fried’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, which used billions in customer funds to back its risky trades.
Sam Bankman-Fried’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.
Gary 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 Securities and Exchange Commission 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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.