US SEC chair says crypto riddled with fraud and non-compliance

US SEC chair says crypto riddled with fraud and non-compliance

US Securities and Exchange Commission (SEC) chair, Gary Gensler, is concerned about the pervasive fraud and regulatory non-compliance in crypto.

In a recent Bloomberg interview, Gary Gensler aired his concerns about the risks associated with crypto investments. His comments come on the back of an impactful court decision related to XRP’s status as a security, which ran contrary to the commission’s viewpoint.

During the interview, the SEC chair expressed concerns about the crypto market, highlighting the prevalence of fraud and individuals trying to deceive others.

He also emphasized that the speculative nature of the industry is not the sole challenge for investors. Instead, he urged investors to remain vigilant and not assume that they will be fully safeguarded under existing securities law.

Following a major lawsuit between the SEC and Ripple, Gensler didn’t hold back in voicing his concerns about the industry’s overall structure. He asserted that investors need to be wary about the lack of protections in the crypto market, even though securities laws should ideally offer some degree of safeguard.

Gensler extended his critique to crypto exchanges, implying that these platforms might not be following the rules that traditional exchanges like the New York Stock Exchange or NASDAQ adhere to, saying:

“You as investors are not getting the full, fair, and truthful disclosure, and the platforms and intermediaries are doing things that we would never in a day allow or think the New York Stock Exchange or NASDAQ would do.”

He also raised concerns over exchanges’ practices, claiming that they are “often are commingling and trading against you and have market makers that are on the other side of your trades.”

Even so, the SEC chair acknowledged the presence of “good faith actors” in the industry but warned that they are heavily outnumbered.

Gensler’s stern warning aligns with the SEC’s established enforcement-first stance, a policy that has been under fire due to perceived regulatory uncertainty. This was also highlighted in the recent XRP ruling.

Coinbase and Binance, two prominent crypto exchanges, are embroiled in litigation with the agency.

The state of crypto regulation in the United States remains fuzzy, with investors and the industry waiting for clearer direction.

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