Home News Crypto firms may still face SEC penalties for self-reporting securities laws violations

Crypto firms may still face SEC penalties for self-reporting securities laws violations


According to reports, the enforcement director of the US SEC has stated that cryptocurrency companies would not be granted amnesty for reporting any securities law violations.

According to a Reuters article on Monday, Gurbir Grewal, the SEC’s director of enforcement, said the agency would see crypto businesses’ conduct “more positively” if they self-report securities law infractions first. He did warn, though, that while companies may face lower penalties, they will not be fully free of responsibility.

“‘Register your product and we’ll disregard the billions you have under management in this crypto lending product,’ is not our message to [crypto businesses]. ‘As well as your infractions of securities laws,’ “Grewal remarked.

In July 2021, the SEC’s enforcement director arrived from the New Jersey Attorney General’s office. He fought back against claims that the SEC would use “regulation by enforcement”. In order to regulate crypto and other securities in November, saying:

“First and foremost, let me state unequivocally that we support and encourage the use of innovative technologies for capital development. They have the potential to improve the efficiency and dynamic of our markets, as well as boost investor access. But, more crucially, any securities offered or sold to US investors must conform with US securities regulations. Regardless of their form or name.”

“Come in and chat”

Grewal’s reported statement appears to contradict SEC chair Gary Gensler’s repeated requests for crypto businesses to “come in and chat”. That is, register their securities with the regulatory agency. Many crypto companies and their products, according to Gensler, may fall under the SEC’s regulatory scope. And must be registered in order to protect investors. Commissioner Hester Peirce, dubbed “Crypto Mom” by many in the industry, has repeatedly chastised the SEC for a lack of regulatory clarity regarding crypto companies and potential securities law violations.

As the crypto industry grows, the SEC appears to be increasing its enforcement efforts against crypto businesses. Two persons and a Cayman Islands-based firm accused in August 2021 in a $30 million securities fraud case employing decentralised finance technology. BlockFi, a crypto lending company, said earlier this month that it would pay $50 million to the SEC. As well as $50 million in state-level enforcement cases for allegedly failing to register high-yield interest accounts.

Gary Gensler discussed how securities laws apply to crypto tokens

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