More crypto lawsuits coming soon, warns ex-SEC chief
- As the crypto market struggles to recover from the lows of 2022, a former SEC officer issued a warning that enforcement may continue in the future.
- The U.S. SEC’s chairman, Gary Gensler, has already started enforcing strict regulations on some of the biggest Bitcoin companies.
With its newly filed action against multiple businesses and individuals connected to digital assets, the U.S. Securities and Exchange Commission (SEC) has heightened market uncertainty.
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A former SEC officer offered a warning that enforcement may continue in the future as the cryptocurrency market works to rebound from the lows of 2022.
John Reed Stark, the former chief of the U.S. SEC’s Office of Internet Enforcement, was quoted in the Financial Times as saying that he is confident that the market will continue to see more cases in the future. He claimed that a regulatory storm is currently engulfing the cryptocurrency sector.
In light of the ongoing crackdown on digital assets, regulatory experts claim that providers of cryptocurrency exchange-traded funds are having difficulty positioning their offerings as reliable investments.
Top crypto firms in soup
At a time when investors are at risk, Stark stated that the commission would not be allowed to do anything. He continued, “It feels like a new lawsuit is being filed against the cryptocurrency business every day.”
However, the former chief emphasized that occasionally investors need protection for themselves and compared the enforced restrictions to seatbelt requirements.
Gary Gensler, chair of the U.S. SEC, has already begun taking harsh enforcement measures against some of the largest cryptocurrency firms. This includes exchanges like Kraken and Gemini as well as the lender for digital assets, Genesis.
The cryptocurrency industry saw tremendous volatility as the prices of well-known digital assets such as Bitcoin and Ethereum dropped from all-time highs in 2022.
These precipitous drops triggered the bankruptcy of several previously well-known enterprises, including loan platform Celsius Network and Bitcoin hedge fund Three Arrows Capital.
Coinbase Global Inc announced a month ago that it had received a notification from the Securities and Exchange Commission warning that the cryptocurrency exchange could face civil action over some of its products.
A Wells notice indicates that the SEC intends to recommend enforcement action against the corporation, but it does not always result in charges or indicate that the recipient has broken any laws.
ETFs approvals on hold
The SEC has shown a willingness to accept crypto futures ETFs, which are funds that follow futures contracts based on cryptocurrency prices but are sold on regulated futures exchanges.
It has consistently refrained from approving ETFs that want to hold cryptocurrencies, claiming that doing so would put investors at risk of market manipulation because cryptocurrency trading takes place on mainly unregulated exchanges.