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Gary Gensler hints at specifics regarding the SEC’s $5 billion revenue from enforcement measures, casts doubt on cryptocurrency.
The speech delivered by Gary Gensler, the head of the United States Securities and Exchange Commission (SEC), at the 2023 Securities Enforcement Forum highlighted the regulatory agency’s enforcement measures that resulted in $5 billion in judgments and orders. Nevertheless, Gensler’s remarks regarding the cryptocurrency sector sparked discussions within the crypto community on social media, where he stated, “Don’t get me started on crypto. I won’t even name all the individuals we’ve charged in this highly noncompliant field.”
In discussing the economic implications of the SEC’s enforcement actions, Gensler mentioned that the agency initiated over 780 enforcement actions in 2023, which included more than 500 standalone cases. These enforcement actions culminated in judgments and orders amounting to $5 billion, with $930 million allocated to affected investors.
Gensler noted that since December 2021, the SEC has filed lawsuits against 40 companies for breaching various rules and regulations, resulting in penalties exceeding $1.5 billion. He also disclosed that the SEC resolved recordkeeping-related charges with 23 firms in the previous fiscal year alone.
During his address, the SEC chief reaffirmed his previous position on cryptocurrency, asserting that a significant portion of the crypto market is classified as securities and, therefore, must adhere to the same legal framework. In elaborating on the extensive definition of security, Gensler discussed the notion of an “investment contract” and the reasons why a substantial segment of the cryptocurrency market aligns with this definition. He indicated that most cryptocurrency assets are likely to satisfy the investment contract criteria, thereby falling under securities regulations.
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Gensler proceeded to compare the present crypto landscape to the financial environment of the 1920s, a time when securities laws were absent. He remarked that the current crypto ecosystem is experiencing challenges similar to those faced before the establishment of clear regulations, resulting in numerous scams, frauds, and bankruptcies. He contended that these problems warrant more stringent regulations.
“Without prejudging any one asset, the vast majority of crypto assets likely meet the investment contract test, making them subject to the securities laws.”
The SEC chief’s critique of the cryptocurrency market is not a recent development, as he has maintained a similar viewpoint for several years. However, the crypto community, including several prominent businesses operating in the U.S. and members of Congress, have urged Gensler to provide greater clarity regarding crypto regulations.
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