SEC Chair Gary Gensler made a statement Thursday that the agency is quickly losing patience with digital-asset exchanges and other companies that do not adhere to SEC regulations. As a result of this, the watchdog filed a lawsuit against FTX co-founder Sam Bankman-Fried and two other prominent crypto executives, Gary Wang, and Caroline Ellison, earlier in the day. This is a clear indication that the SEC is serious about enforcing its regulations and will take action against those who do not comply. It is important for digital-asset exchanges and other firms to understand that the SEC will not tolerate any violations of its regulations and will take action against those who do not comply.
The runway is getting shorter to start following rules and register with the agencySEC Chair Gary Gensler
Over the past year and a half, the SEC Chief has made a strong case that most tokens being traded on the blockchain actually qualify as unregistered securities. He has urged those trading and investing in these tokens to adhere to the strict regulations established by the SEC. If these regulations are not followed, the SEC has the power to take legal action against those involved. As such, it is important for those trading and investing in tokens to be aware of these regulations to ensure that they are in compliance with the law.
The US Securities and Exchange Commission (SEC) has recently accused former FTX chief executive officer Sam Bankman-Fried along with two of his former top associates, Caroline Ellison and Gary Wang, of participating in a fraudulent scheme to mislead investors. The SEC alleges that Bankman-Fried and his associates falsely represented FTX as a safe platform, while at the same time diverting customer funds to trading firm Alameda Research and deliberately hiding other potential risks and issues. The SEC is pursuing civil charges against Bankman-Fried and his associates for their alleged involvement in this scheme.
The implications of the Securities and Exchange Commission (SEC) successfully arguing that crypto tokens like FTT are securities regardless of how they are offered could be far-reaching. If the courts agree with the SEC, it would open the door for the agency to pursue any intermediary that sells those tokens in any context. This would mean that major crypto exchanges like Coinbase, Kraken, and Binance would be exposed to immense legal liability, leaving them with the option of either participating in regulated exchanges such as the New York Stock Exchange, or ceasing operations entirely.
Proof of reserves is neither a full accounting of the assets and liability of a company, nor does it satisfy segregation of customer funds under the securities laws,Gary Gensler
On Thursday, Gary Gensler spoke out against the practice of “proof-of-reserves reports” used by some crypto companies such as Binance Holdings Ltd. This practice, which is intended to prove that the company has enough funds on hand to back customer deposits, is not enough to protect investors according to Gensler. He believes that more transparency and disclosure is needed in order to properly protect investors.