The US Securities and Exchange Commission (SEC) is preparing for new investigations targeting the cryptocurrency industry. According to DL News, the SEC is focusing on cryptocurrency venture capital companies, alleging they have been selling unregistered securities.
Ari Paul, Chief Investment Officer of BlockTower Capital, discussed these investigations on the Unchained podcast. He said the SEC is probing whether these firms are acting as unregistered securities dealers. This move signals increased pressure on the digital asset industry under the leadership of SEC Chairman Gary Gensler.
Paul explained that some VCs might be violating securities laws. He noted that before a cryptocurrency project launches a token, it often makes deals with market makers or venture firms. In these agreements, the crypto project promises to sell tokens to VCs at a significant discount from the expected future trading price. In return, the VC promotes the token. Paul stated, “These agreements make VCs act like securities dealers. Ethically, they resemble pump-and-dump schemes.”
The SEC, led by the stringent Gary Gensler, has already filed lawsuits against Coinbase, Kraken, and Binance. These firms are accused of illegally offering unregistered securities to investors. The DeFi industry has also been targeted. On June 28, the SEC filed a lawsuit against ConsenSys, accusing it of unregistered sales of securities through the MetaMask staking service.
The SEC’s latest actions show its continued efforts to regulate the cryptocurrency market. These investigations aim to ensure that crypto firms comply with securities laws and protect investors from potential fraud.
