‘Fraudsters, hucksters and scam artists’: Gensler defends SEC track record on crypto in wake of FTX scandal.
By Chris Matthews
Gensler is ‘very proud’ of SEC’s enforcement efforts
As disgraced FTX founder Sam Bankman-Fried awaits sentencing for orchestrating one of the largest financial frauds in U.S. history, Securities and Exchange Commission Chairman Gary Gensler says he has few regrets over how his agency has overseen the cryptocurrency industry.
The SEC Chair has come under fire for not doing more to thwart frauds like FTX, but he defended his record, pointing to the more than one hundred enforcement actions the SEC has brought against crypto companies and entrepreneurs, including Bankman-Fried, though those charges were filed after FTX collapsed.
“I’m very proud of the SEC dedicated staff working in this area for well over six years now,” Gensler told MarketWatch in an interview, recorded just prior to the Bankman-Fried verdict.
He said that the industry is “largely non-compliant” with federal securities laws, a situation that has created a lot of work for an agency tasked with protecting investors by requiring information disclosures.
“It’s a field with a lot of fraudsters and hucksters and scam artists, far too many bankruptcies” and “far too many investor losses,” Gensler said.
The SEC Chair was confident that the U.S. has the right laws on the books in order to regulate cryptocurrency markets. The SEC has sued top crypto exchanges, like Coinbase (COIN) and Binance, for operating illegally, though both claim they have operated within the bounds of U.S. law and regulations.
Damian Williams, the U.S. attorney who secured Bankman-Fried’s conviction, agreed on Thursday, saying that the case serves as a “warning to every fraudster who thinks they’re untouchable” to reconsider the notion. “And if they don’t, I promise we’ll have enough handcuffs for all of them.”
When asked about a recent incident in which a false rumor about the approval of a spot bitcoin ETF sent the world’s most popular cryptocurrency surging 10%, Gensler said that the Commodity Futures Trading Commission had the authority to monitor bitcoin (BTCUSD) spot markets for fraudsters who may seek to profit from manipulating the market.
Congress is currently debating whether to adopt new laws that would give the CFTC a larger role in regulating cryptocurrency markets at the expense of the SEC. The legislation has the support of the Republican-controlled House Financial Services Committee, but it faces long odds in the Democratic Senate.
Gensler says he has enough legal authority as it stands to bring the industry into compliance with the securities laws, so that companies issuing crypto tokens, and platforms that bring together buyers and sellers, are disclosing necessary information and adhering to rules that protect retail investors.
“Compliance isn’t just for compliance sake,” Gensler said. “It’s to protect investors.”
-Chris Matthews
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11-03-23 1552ET
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