Recently, during a Senate hearing, SEC Chairman Gary Gensler said that, in his opinion, crypto is characterized by fraud, abuse, and misconduct.
See below for all the details.
The warning from SEC Chairman Gary Gensler: crypto and emerging risks
In his most recent speech critical of the crypto world, SEC Chairman Gary Gensler stated that the cryptocurrency industry is characterized by “a high incidence of fraud, abuse and dishonest conduct.”
Gensler appeared on Capitol Hill to testify before the Senate Banking Committee and shared his concerns about the cryptocurrency industry, stating the following:
“If the industry can comply with investor protection requirements under current legislation, this would be a boon for investors. However, we are unfortunately currently witnessing a number of serious breaches, and the industry is riddled with scams, abuse and bad behavior.”
As we know, Gensler has never hesitated to express sharp criticism of the cryptocurrency industry in the past. As early as July, in fact, he warned investors that cryptocurrencies were “saturated with fraud and speculation,” in an interview with Bloomberg.
Specifically, the Senate committee called Gensler as a witness to discuss oversight by the SEC. Not surprisingly, Gensler added the following:
“Technology, markets and business models continue to change dramatically. Today we live in the era of e-commerce and generative artificial intelligence.
We have seen extraordinary growth in the scope, size and interconnectedness of our capital markets, with more individual investors participating than ever before. Furthermore, there are other fast-growing economies that could try to supplant us if they can.”
Recently, numerous cases of controversy have arisen related to the SEC’s decisions on cryptocurrency, including its decisions on applications for approval of Bitcoin-related ETFs and other regulations.
In addition, the possibility of dismissing Gensler from his position has appeared, but such a decision does not appear to be imminent.
SEC maintains its stance on cryptocurrency and regulation
As we know, there has been a prolonged legal dispute between the SEC and the digital asset environment in recent months.
Despite Ripple obtaining a ruling categorizing its XRP token as not a security, the SEC has continued to uphold its position against it.
This position was reiterated by SEC Chairman Gary Gensler during his recent written testimony.
Indeed, Gensler maintained his classification of cryptocurrencies as securities and disclosed the numerous enforcement actions taken by the agency during the year. He specifically stated the following:
“There is nothing in the cryptocurrency market to suggest that investors and issuers should enjoy any less protection under applicable securities laws.”
Not only that, Gensler also emphasized the need to apply these laws to digital currencies. Next, he addressed the increase in regulatory actions, which has drawn criticism for the agency’s actions.
Indeed, he stated:
“Given the widespread violations of securities laws in this industry, it is not surprising that we have taken numerous actions.”
However, he did not clarify the idea that the industry may not justify similar regulation of securities, raising questions about the compatibility of existing laws with its mechanisms to benefit consumers.
Despite the many criticisms he has received, Gensler has remained steadfast in his convictions.
Binance.US calls SEC’s request coercive
Recently, Binance.US also reacted to the Securities and Exchange Commission’s (SEC) deposition request, calling it overly coercive. In fact, the exchange claims that the SEC has not presented evidence to support claims that customers’ funds were misdirected.
In an official statement, Binance pointed out that despite extensive reviews already conducted during the expedited review period, the SEC has not provided evidence to support its unfounded allegations of misappropriation of investors’ assets.
Hence, the exchange has continued to reiterate that it adequately supports and maintains control of its digital assets, a fact supported by a range of evidence, including documents, affidavits and testimony.
The SEC charges, issued in June, involve Binance CEO Changpeng “CZ” Zhao and Guangying “Helina” Chen, who are accused of transferring billions in customer funds through intermediaries.
Both Binance and CZ have rejected such charges. Binance’s statement reiterated CZ’s position that the exchange does not disrupt any control over the private keys to customer resources.
Despite the SEC’s initial request to freeze Binance.US’s assets, a US judge rejected that request and instead ordered the parties involved to begin negotiations to continue operations.
As a result, Binance.US continues to strongly defend its position and insists that the SEC must present concrete evidence to support its allegations of shifting funds.