SEC Warns of Increased Enforcement Against Crypto Exchanges and DeFi Platforms

The US Securities and Exchange Commission (SEC) warns of upcoming charges against crypto exchanges and decentralized finance (DeFi) platforms. The regulatory agency is increasing its enforcement efforts and cracking down on violations of securities laws in the crypto industry.

Posted 8 months ago in DeFi and CeFi

SEC spokeswoman giving a speech at a conference

The US Securities and Exchange Commission (SEC) is intensifying its efforts to crack down on the crypto industry, including both centralized exchanges and decentralized finance (DeFi) platforms. In a recent speech at the Securities Enforcement Forum Central in Chicago, David Hirsch, the head of the SEC's Crypto Assets and Cyber Units, stated that the agency is actively pursuing action against several firms.

Hirsch emphasized that the label of “DeFi” will not deter the SEC from taking action against platforms that are suspected of violating securities laws. However, he acknowledged that the agency lacks the resources to prosecute all tokens it deems as securities violations.

Notably, the SEC has already taken action against a decentralized finance platform earlier this year. The agency charged two individuals and their company for selling unregistered securities in the form of tokens. The defendants agreed to stop their operations and pay significant penalties and disgorgements.

In addition to DeFi, the SEC has also targeted Initial Coin Offerings (ICOs), which are used by crypto projects to raise funds through the sale of new tokens. According to the SEC, most of its enforcement actions in 2022 were related to unregistered securities offerings.

Recent actions by the SEC include lawsuits against major crypto exchanges Binance and Coinbase. The agency accused Binance of deceiving regulators and mismanaging customer funds, while Coinbase faced an enforcement action for operating as an unregistered broker-dealer.

Hirsch revealed that the SEC is not only investigating exchanges but also other intermediaries in the crypto space, such as brokers, dealers, and clearing agencies. The agency is focused on entities that have failed to comply with investor disclosure and regulatory requirements.

The intensified enforcement efforts by the SEC indicate a growing regulatory scrutiny over the crypto industry. Market participants should be prepared for increased compliance requirements and potential legal actions from the SEC in the future.

Last updated 9/20/2023, 4:50:04 PM


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