His warning follows several recent enforcement actions by the securities regulator against major crypto-currency companies.
The SEC’s regulatory assault is just beginning
Former Securities and Exchange Commission (SEC) official John Reed Stark has warned the crypto-currency industry of an escalating “regulatory onslaught“. John Reed Stark founded the SEC’s Office of Internet Enforcement and served as its chief for 11 years. He also served as SEC counsel for 15 years, where he led cyber-related projects, investigations and enforcement actions.
John Reed Stark explained in a tweet Thursday that the SEC hit Blockfi for not registering its crypto-currency lending program, prevented Coinbase from launching its crypto-currency lending program, and just hit Gemini/Genesis for its crypto-currency lending scam. He warned:
Buckle up: The SEC’s regulatory assault is just beginning.
Last week, the SEC charged crypto exchange Gemini and crypto lender Genesis “for the unregistered offer and sale of securities to retail investors through the crypto asset lending program Gemini Earn“. In February last year, the regulator took action against crypto-currency lending platform Blockfi, which filed for bankruptcy in November. In addition, the securities watchdog also threatened to sue Coinbase if the Nasdaq-listed crypto-currency exchange proceeded to launch a lending program in September 2021. Coinbase subsequently abandoned its plan.
Such disturbing conflicts in the FTX bankruptcy. Not surprising that the US Trustee objects to retention of Sullivan & Cromwell. My question: Why are Celsius/BlockFi/Voyager/FTX/etc. in Chapter 11 (reorganizations) as opposed to Chapter 7 (liquidations)? https://t.co/FqP1z5N9eR pic.twitter.com/AJHmKRYA1q
John Reed Stark (@JohnReedStark) January 15, 2023
Stark is a vocal crypto-skeptic, regularly commenting on social media about the danger of investing in crypto-currencies. “In the land of crypto-currencies, the Ponzi game continues & a death spiral may now have begun“, he said last November. “Don’t fail at your own risk crypto investors,” he insisted, pointing out that crypto has “no FDIC insurance, no SEC review team, no regulatory oversight, no licensing and no consumer protections.“He warned that’with crypto investments :
You are entirely on your own.
Citing Stark, CNBC Mad Money host Jim Cramer also warned that the SEC is making a “big sweep” in the crypto industry. He urged investors to get out of crypto now.