The US Securities and Exchange Commission (SEC) does not appear to be slowing down when it comes to its crypto industry crackdown.
Robinhood Crypto became the latest company to join the long list of firms that have been served notice of impending enforcement action by the securities regulator.
The Reasoning
The Chairman of the SEC, Gary Gensler appeared on CNBC this week but refused to get into the details of the Robinhood case, or any others for that matter.
However, he did respond to questions from Ross Sorkin about why the agency seems to be so focused on the crypto industry right now.
According to Gensler, crypto journalists and the financial media have certainly played a role in the entire scenario.
But, he also added that the share of the crypto market in fraud and financial scams is ‘outsized’, which has also been a factor.
He said that while crypto makes up a small portion of the overall market, it has a bigger share of the problems and scams in the market.
He added that he was not judging any token, but it was mostly because the industry is noncompliant with the securities laws and the protections they offer.
Therefore, he said that there is a huge number of crypto journalists and their questions as compared to the market cap.
The SEC Boss
Gensler was not pleased with the idea of Sorkin asking any questions related to crypto. In fact, the SEC boss pushed back at the host.
Sorkin questioned the chairman if the crypto enforcement of the SEC was also an indicator of where the attention of the agency is and Gensler said that it was because of people’s attention.
He said that he had appeared on Sorkin’s show about a dozen times and every time, he had been asked about crypto.
He asserted that this time around as well, most questions would still be about crypto, even though the capital markets are valued at $110 trillion.
Thus, he said that it was also about the focus of the financial media and not just the enforcement actions of the SEC.
No comments
Gensler did not comment on the recent lawsuit filed against the agency by Consensys, an Ethereum software firm.
It is a preemptive lawsuit that the company filed after it was served a Wells Notice over its MetaMask crypto wallet.
The SEC sends a Wells Notice when it intends to bring enforcement action against an individual, or business, which means that Consensys is likely to face a lawsuit.
Likewise, Gensler refused to comment on whether the SEC regards Ethereum as a commodity or a security.
Consensys alleged in its lawsuit that the regulator has already been referring to Ethereum as a security for a year and now the company wants the court to declare that it is not a security.
However, Gensler did reaffirm that most cryptocurrencies should be considered securities and also said that there are no appropriate disclosures available to investors for investing in these assets.
He said that a lot of people had lost their hard-earned money in the crypto industry and that investors were not getting the complete, full, and truthful information they need for making an investment.