U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler outlined two paths the agency is taking to regulate the crypto-currency industry. Meanwhile, a U.S. congressman is investigating whether Gensler helped FTX CEO Sam Bankman-Fried and his failed crypto-currency exchange over legal loopholes to gain a regulatory monopoly.
SEC Chairman Gary Gensler on the failure of FTX.
U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler discussed crypto-currency regulation and the loss of crypto-currency exchange FTX in an interview with CNBC on Thursday.
Without confirming whether the SEC is investigating FTX, the chairman explained that when crypto-currency exchanges “Shuffle a bunch of customer money“without disclosure and”leverage to borrow against it“, investors are harmed.
He was also asked about the watchdog going after Kim Kardashian, who on a relative basis is a much smaller case than FTX. Gary Gensler responded:
Look, I think investors need more protection in this space. But I would say this, this is an area that is significantly noncompliant, but there are regulations and those regulations are often very clear, and we have multiple paths.
“One of them is to work with these crypto-currency exchanges, these crypto-currency lending platforms, to make sure that they are properly registered and that the public is protected“, he explained.
Another path is law enforcement, Gary Gensler emphasized. “We have brought, between my predecessor and the teams currently at the SEC, at least 100 actions … and we have been very clear in these various enforcement actions.“He also referred to the regulator’s recent victory against LBRY.
Come on in, talk to us!
Gary Gensler has often said that crypto-currency exchange and lending platforms should “Come in, talk to us, and get registered.“
According to his calendar, FTX CEO Sam Bankman-Fried did come to speak with him on March 29. “Do you feel you have been deceived?” he was asked.
The SEC chairman replied:
I think we’ve been clear in these meetings…noncompliance is not going to work, the public is going to suffer, but we’re also going to continue on those two tracks.
He added that if necessary, the SEC will “the cop on patrol, going to court, putting the facts and the law before the judges“.
“It’s about the platforms or the intermediaries. It’s not like the New York Stock Exchange or Nasdaq“, Gary Gensler pointed out, adding that a handful of crypto-currency lending and trading platforms “comingle“assets. It is his opinion that:
This is another toxic combination of taking people’s money, borrowing against that money, not much transparency, and then trading against your customers.
The chairman added that the SEC is focusing on these platforms but “Building the evidence, building the facts often takes time.“
A congressman is investigating whether Gary Gensler helped FTX find legal loopholes.
Following the Gary Gensler interview, Congressman Tom Emmer tweeted that his office has received reports alleging that the SEC chairman helped Bankman-Fried and FTX work legal loopholes to gain a regulatory monopoly. “We review this case“, the legislator wrote.
Last week, four members of Congress accused Gary Gensler of ” hypocritical mismanagement of the SEC “, pointing out that it refuses to practice what it preaches. This week, two legislators said they were “deeply concerned“about the SEC promulgating rules too quickly, without sufficient feedback. Gensler has also been criticized for taking an enforcement-centric approach to regulating the crypto-currency industry.