SEC's Ongoing Crypto Firm Investigations Stir Controversy
Summary:
Major cryptocurrency companies like Binance, Coinbase, and Ripple face ongoing inquiries from the United States Securities and Exchange Commission (SEC). Criticized for his ‘regulation by enforcement’ strategy, SEC Chair Gary Gensler has led many of these cases to federal court to determine the nature of a security. Prometheum, a significant name in the crypto sector, successfully registered with the SEC as a specialized broker-dealer for digital asset securities. The SEC proclaimed an unbending stance against any firm violating U.S. securities law, indicating future actions against burgeoning decentralized finance projects.
Major cryptocurrency firms such as Binance, Coinbase, and Ripple are currently under investigation by US regulatory bodies, including the Securities and Exchange Commission (SEC). The approach of the SEC, under the leadership of Gary Gensler since 2021, has been criticized by several industry leaders and lawmakers. His "regulation by enforcement" strategy toward cryptocurrency establishments has landed some of these cases in federal law courts. Court rulings on these matters, which often concern the definition of a security in America, have not always been in favor of regulatory bodies.
In a case against Ripple, the SEC alleged that XRP was an unregistered offering. Interestingly enough, a partial judgment in July declared that the token, for the most part, was not a security. Coinbase, anticipating a legal battle with the SEC, counter-sued the regulator. The reason for this action was the SEC's unsuccessful or inadequate response when Coinbase attempted to register itself.
Prometheum, a popular name in the cryptocurrency sector, marked a significant achievement in May when the Financial Industry Regulatory Authority approved them as a specialized broker-dealer for digital asset securities. The company's subsidiaries, also dealing with digital assets, had been successful in registering with the SEC.
Prometheum co-CEO Aaron Kaplan, famous for testifying before the House Financial Services Committee, has expressed views that suggest large firms such as Coinbase, Binance, and Ripple, endeavored to reshape existing rules when they launched their services in the U.S. Advocacy groups call for investigation upon firms like Prometheum for possibly leveraging personal relations with regulation bodies to gain an unfair advantage.
The Director of the SEC's crypto enforcement division, David Hirsch, declared at a conference in September that the body would continue to take actions against any firm perceived to be in violation of U.S. securities laws. This vow includes the burgeoning decentralized finance projects. Gary Gensler is scheduled to testify before the U.S. House Financial Services Committee on SEC oversight later this month. Among other issues, lawmakers will question him on policies regarding digital asset activities and the SEC's extended power over cryptocurrency firms.
Published At
9/22/2023 10:00:00 PM
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