US Securities And Exchange Commission (SEC) Chairman Gary Gensler Speak with Senator Elizabeth Warren (D-MA) before he testified before an oversight hearing. Senate Banking, HousingAnd Urban Affairs Committee On the SEC Capitol Hill In Washington, USA, September 14, 2021.
Evelyn Hockstein | Reuters
WASHINGTON – The Chairman of the US Securities and Exchange Commission (SEC) Gary Gensler on Wednesday criticized the agency for not enforcing measures that would prevent misconduct by cryptocurrency companies. This was after the collapse of crypto exchange giant FTX.
Gensler reported that the SEC has filed more than 100 compliance cases in the crypto space, directly responding to the questions of legislators regarding the agency’s oversight.
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In November, Sen. Elizabeth Warren, D-Massachusetts, urged the SEC to “get its act together” following the failure of FTX, arguing that the agency had been “lagging behind” in the cryptocurrency industry. Members of the House Financial Services Committee also called on Gensler to answer questions on his knowledge of FTX before its collapse.
“We are already equipped,” Gensler told Yahoo Finance.
The SEC chief said that crypto businesses must be held accountable for adhering to existing rules.
“You could think of them as the casinos where the investing public is looking for a better future,” Gensler said. “And because most of these tokens are securities, that means that…casinos have to abide by our time-tested laws.”
“Their business model right now is offering the public, they say, a return of interest in crypto… and then possibly trading against their customers, trading before their customers, lending that out,” He added. “Everywhere else in finance, these conflicts are not allowed and they are separate.”
Bankman-Fried’s firm, Alameda Research, was able to use billions of dollars in FTX client assets. Gensler said that this was in violation of a federal statute. The company filed for bankruptcy on September 11, 2008 and Bankman-Fried resigned from his position as CEO as the company faced a liquidity crisis.
Bankman-Fried denied being a fraudster.
Lawmakers have noted that federal oversight of FTX was hampered by the fact that the company is based in the Bahamas.
Gensler stated that the SEC had successfully prevented other suspicious activities by crypto companies. He cited cases against Poloniex and Coinbase for unauthorized trading as examples.
“We have issued orders against crypto lending platforms, such as BlockFi. We will continue to be a vigorous securities regulator. But I urge these brokerages, storefronts, and casinos to adhere to the SEC if they wish to. These businesses should be separated” he said.
Gensler said the SEC would take further enforcement action if cryptocurrency exchanges do not comply, but did not specify what those would be.
“We can use an exempt authority to customize things… but itR
