Lawyer Predicts Even Worse To Come From SEC

The increasing popularity of the crypto market and the services provided by exchanges to address the global economic crisis have drawn the attention of government agencies worldwide. As a result, regulatory actions and concerns have risen in tandem with the crypto industry’s growth. 

The United States Securities and Exchange Commission (SEC) has been intensifying its regulatory actions on the crypto industry, with a recent emphasis on exchanges falling under its jurisdiction and offering crypto-related “securities.” As a result, legal experts are anticipating even more stringent actions from the SEC. 

Rough Road Ahead For The Crypto Industry

According to Jesse Hynes, a pro-crypto lawyer, many believe that the crypto crackdown is here, and while the worst has not happened yet, Hynes believes it is imminent. However, Hynes argues that it will ultimately be beneficial for investors. 

Hyne’s statement highlights the “deceptive” marketing practices that some crypto companies engage in to attract investors. Using phrases such as “own,” “earn,” and “decentralized are common “tools” used by these companies to create a sense of investment opportunity and community involvement. 

However, Hynes points out that these “marketing tools” can be misleading, as they often do not accurately reflect the true nature of the company or its operations. He further claims:

The answer is to protect those investors by actually giving them legal rights, entitlements, and protections as a result of their purchases. This is coming. I believe many crypto and NFT projects will be deemed to have raised money by way of security. 

Jesse Hynes’ statement further clarifies that he is not insinuating that all non-fungible tokens (NFTs) or cryptocurrencies are securities, as the SEC has claimed in various opportunities. Instead, he points out that many were “packaged” and sold as part of a security offering during fundraising rounds. 

Furthermore, Hynes argues that the regulatory system is “messed up and backward,” which is ineffective in targeting the worst actors in the industry. Instead, he suggests that it is more likely that the more famous actors in the industry will be targeted first. 

This may be because they are more visible and “easier” to regulate or because they have a higher public profile and are, therefore, more likely to attract attention from regulators in the US. He concluded:

In the end, I do believe that we will end up where we were meant to be- investor protections.  The process of getting there will honestly suck and will be slow. 

SEC Ramps Up Crypto Crackdown with Additional Prosecutors

The Securities and Exchange Commission faces multiple legal battles in the crypto industry, including the XRP lawsuit and claims of Binance.US operating an “unregistered securities exchange.” The regulatory agency is reportedly preparing to strengthen its enforcement capabilities with new hires.

These developments signal a potential escalation in the SEC’s efforts to regulate the crypto industry and enforce compliance with securities laws. However, it is well-known that the SEC has been dealing with criticism from the U.S senate since October 2022.

For this, SEC has been facing criticism and challenges from various fronts in the crypto industry. This includes allegations by the Senate that SEC Chair Gary Gensler has overstepped his authority and taken a hostile stance towards the industry. As a result, the SEC has been experiencing a staff exodus since mid-2022.

Nevertheless, a clear regulatory framework is key for the sake of the crypto industry, which would lead to further innovations and growth for the nascent sector, which provides possibilities and different services to its customers to endure current and future financial crises. 

BTC with sideways price action on the 1-day chart. Source: BTCUSDT on TradingView.com

Featured image from Unsplash, chart from TradingView.com

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