Chairman of the United States Securities and Exchange Commission (SEC), Gary Gensler speech at the 2023 Securities Enforcement Forum shed light on the regulator’s enforcement actions worth $5 billion in judgments and orders. However, Gensler’s delve into the cryptocurrency market became a topic of conversation for the crypto community on social media when he said: “Don’t get me started on cryptocurrencies. “I won’t even name all the people we have accused in this field of high non-compliance.”
Discussing the economic outlook for SEC enforcement actions, Gensler noted that the agency filed more than 780 enforcement actions in 2023, including more than 500 standalone cases. The enforcement actions resulted in judgments and orders totaling $5 billion, of which $930 million was distributed to aggrieved investors.
Gensler added that the SEC had filed lawsuits against 40 companies for violations of various rules and regulations since December 2021, resulting in more than $1.5 billion in penalties. Gensler revealed that the SEC settled record-keeping charges with 23 companies in the last fiscal year alone.
In his speech, the head of the SEC reiterated his previous stance on cryptocurrencies, stating that the majority of the cryptocurrency market falls under the group of securities and should be governed by the same law. In his explanation of the broad definition of security, Gensler explained the concept of an investment contract and why a large portion of the cryptocurrency market resembles it. According to Gensler, most cryptocurrency assets will pass the investment contract test, which will bring them under securities regulations.
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Gensler continued to make comparisons between today’s crypto ecosystem and the financial landscape of the 1920s, when securities laws did not exist. Gensler said that the crypto ecosystem suffers from the same situation as the financial landscape before clear regulations, leading to various scams, frauds, and bankruptcies. He argued that these issues require stricter regulations.
“Without prejudging any asset, the vast majority of crypto assets likely meet the investment contract test, making them subject to securities laws.”
Gensler’s criticism of the cryptocurrency market is nothing new and he reiterates a similar position for several years. However, members of Congress, the crypto community, and some key companies operating in the US have called on Gensler to offer more clarity on crypto regulations.
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