The crypto industry is full of fraud and resembles the stock market of the 1920s before regulation. This said by SEC Chair Gary Gensler.
He titled his speech at the Piper Sandler Global Exchange & Fintech conference “We’ve already seen this story”.
“Traders, fraudsters, scammers, Ponzi schemes. The public has lined up to sue in bankruptcy cases,” the agency head described the state of the digital-asset industry.
Gary’s latest crypto attacks. It’s definitely personal for him… pic.twitter.com/b0UcDx4I92
— Coin Bureau (@coinbureau) June 8, 2023
In his view, the existing laws are fully applicable to participants in the industry. Universal rules set measures to protect investors, including disclosure, preventing fraud, manipulation, conflicts of interest, separation of funds and duties, and other requirements, noted Gensler.
Crypto firms are capable of complying with the established norms, and they should not rely on financial innovation in this regard, the regulator head said. This applies equally to centralized intermediaries like exchanges, as well as DeFi service providers such as staking.
He quoted Gurbir Grewal, the SEC’s Director of Enforcement:
“You can’t simply ignore the rules because you don’t like them or prefer others — the consequences for investors are too great.”
It was deliberate non-compliance with the investor-protection norms long established on traditional markets that led to the collapse of projects such as Terra and drove the bankruptcies of BlockFi, Celsius, FTX or Genesis, Gensler said. The SEC’s claims against Bittrex, Binance and Coinbase also do not breach existing norms, he stressed.
“In the end, markets are built on trust. For 90 years that trust rested on compliance with securities laws. The crypto industry should not undermine the public’s trust in capital markets or harm investors,” concluded Gensler.
Earlier, the head of the SEC expressed doubts about the need for the modern crypto world, given that fiat currencies such as the dollar or euro are already digital.