17. April 2024

SEC Chair Warns of Crypto Fraudsters: Most Tokens Are Securities

• SEC Chair Gary Gensler says the crypto industry is teeming with criminals and illicit activities.
• He reiterates that most digital tokens are securities and should register with the SEC.
• The SEC has filed charges against major crypto exchanges Binance and Coinbase for violating investor protection laws.

SEC Chair Gary Gensler Warns of Crypto Fraudsters

The U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler recently spoke at the Piper Sandler Global Exchange and FinTech Conference in New York City where he warned about the dangers of fraudsters operating in the crypto industry. Comparing it to the 1920s, where federal securities laws did not exist, Gensler said: “Hucksters. Fraudsters. Scam artists. Ponzi schemes. The public left in line at the bankruptcy court.”

Most Digital Tokens Are Securities

Gensler also affirmed that most digital tokens are classified as securities, which means they fall within the purview of SEC regulation. According to him, this means that most crypto intermediaries must comply with securities laws to protect investors from being taken advantage of by failing projects or dishonest actors, such as fraudsters or scam artists running Ponzi schemes.

SEC Suing Crypto Exchanges

The SEC’s stance on crypto was further reinforced by their lawsuits against two of the largest exchanges – Binance and Coinbase – for allegedly violating federal securities and investor protection laws. Binance is facing multiple charges while Coinbase is accused of operating an unregistered securities exchange, broker and clearing agency without proper disclosure or safeguards against conflicts of interest like those required by traditional financial institutions.

Protecting Investors From Harm

Gensler highlighted that it was important for regulators like the SEC to step in as its role is to protect investors from being caught in between imploding projects or other illicit activities happening in the industry without their knowledge or consent. He said: “These alleged failures deprive investors of critical protections including rulebooks that prevent fraud and manipulation, proper disclosures, segregation of customer assets, safeguards against conflicts of interest, oversight by a self-regulatory organization, and routine inspection by the SEC.”

Conclusion

Gary Gensler’s speech shows just how serious regulators are taking cryptocurrency related activities today; emphasizing strict compliance with regulations designed to protect investors from harm while still allowing them access to innovative technologies like blockchain networks and digital tokenized assets through regulated platforms like exchanges etc..