U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has once again alleged that several crypto firms are in violation of securities laws in the country.
In a video posted to Twitter on Thursday, Gensler described cryptocurrencies as investment contracts and said that platforms which offer them for trading are merely pretending otherwise.
Intermediaries for investment contracts are required to comply with securities laws & register with @SECGov.
Instead, many crypto platforms are contending that their investment contracts are something else.
The law cares about what something actually is, not what you call it.
— Gary Gensler (@GaryGensler) April 27, 2023
“Crypto markets suffer from a lack of regulatory compliance. It’s not a lack of regulatory clarity,” said Gensler.
His comments come after Coinbase petitioned the U.S. Circuit Court to force the SEC to respond to a rulemaking petition filed in 2022 that has been left unanswered. In the petition, Coinbase poses 50 specific questions to the SEC on the regulatory status of digital assets, seeking clarifications on what aspects of a token would lead to their classification as securities.
Still, Gensler claims that crypto firms are well aware of these facts, alluding to a recent action filed by the regulator where “one crypto platform executive knew the law so well, that he actually advised [token] issuers to scrub specific language from their web pages.”
The SEC Chair was seemingly referring to the lawsuit filed against crypto exchange Bittrex earlier this month, alleging that the platform’s CEO William Shihara coordinated with token issuers to remove problematic statements from public channels to stay out of regulators’ crosshairs.
The same lawsuit also named Dash (DASH), Algorand (ALG), OMG Network (OMG), Monolith (MONO), Naga (NGC) and Real Estate Protocol (IHT) as tokens that the regulator considers securities.
When Gensler himself was asked whether he considered Ethereum, the second largest cryptocurrency by market cap, to be a security, he avoided giving out a direct answer on the subject.
Market participants also unearthed an old video of Gensler speaking to a class at MIT, saying the SEC had already determined that three-quarters of the cryptocurrencies in the industry were not securities.