SEC Chair Gary Gensler Warns of ‘Far Too Many Frauds and Bankruptcies’ in Crypto Industry
Gensler disclosed that the SEC is actively reviewing rules that could potentially hurt the crypto industry.
In a recent interview with CoinDesk, Gary Gensler, chairman of the United States Securities and Exchange Commission (SEC), voiced his concerns regarding the crypto industry, noting that the space is rife with fraud and bankruptcies.
The SEC chair said while he respects investors’ decision to explore the crypto market, he does not believe they receive adequate disclosures regarding the projects they invest in.
Gary Gensler Shares Deep Concern Regarding Crypto
Gensler also questioned the genuineness of the value proposition of some of the digital assets categorized as securities.
“If there’s a good or service, we can understand that, but what’s the value proposition of actually having a decentralized token?” he asked.
He further stated that “many of these projects are just “speculative investment contracts,” including Bitcoin (BTC), which is recognized as a commodity.
Gensler warned that investors should be careful and do due diligence before investing in any crypto because they could lose 100% of their funds.
“Investors should be wary, they should be careful, they should be ready to lose 100% of their assets – if you can find a website, if you can read about them in CoinDesk, you’re likely making a bet on those entrepreneurs,” Gensler said.
SEC to Introduce Rules that Could Impact the Industry
The SEC chair further pointed out that his agency is concerned about companies commingling user’s funds. Recall that the financial regulator has sued many crypto companies, including the bankrupt exchange FTX, for allegedly misappropriating user’s funds.
In addition to misappropriating users’ funds, Gensler said that some of these companies engage in wash trading and trade against their customers to enrich their pockets at the expense of their users.
In response to the escalating fraud in the emerging market, Gensler disclosed that the SEC is actively reviewing rules that could potentially hurt the industry.
So far, the SEC has not introduced any rules to govern the crypto industry. Instead, the agency has taken a regulatory stance through enforcement actions. The SEC has filed lawsuits against major industry players, including Coinbase, Binance, Kraken, and Gemini, for operating in the United States without proper registrations.
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