U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has reiterated that the crypto industry is filled with instances of abuse and fraud, citing a significant number of bankruptcies in recent years. He also cautioned investors in spot bitcoin exchange-traded funds (ETFs) that these products are based on a “highly speculative volatile underlying asset: bitcoin.”
SEC Chair Gary Gensler Insists Crypto Field Is 'Rife With Abuses and Fraud'
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‘The Whole Field Is Rife With Abuses and Fraud’
The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, emphasized that the crypto industry is plagued by fraud and noncompliance in an interview with Yahoo Finance on Friday.
When questioned about the potential approval of spot ether ( ETH) exchange-traded funds (ETFs), Gensler emphasized that he wouldn’t prejudge any applications, as the SEC currently has 10 spot ether ETF filings under review. Moreover, he described:
I think the whole crypto field has challenges. The whole field is rife with abuses and fraud. Look at the series of bankruptcies in ‘22 and ‘23.
He explained that in the middle of the market, “there are intermediaries that are pulling together your hard-earned assets … and not giving you the proper disclosures.”
Noting that “They’re doing things that we would never allow the New York Stock Exchange to do,” Gensler detailed: “They’re trading against you. They’re commingling your funds. They’re maybe lending your funds out. They’re operating as a clearing house, a broker-dealer, and an exchange. I think that puts the investing public at risk.”
Regarding whether the SEC will approve a spot ethereum ETF, Gensler explained that the securities watchdog looks at “the facts and circumstances” in front of it.
He noted that when the Commission approved 11 spot bitcoin ETFs in early January, he thought it was “the most sustainable path forward.” Gensler opined: “Investors got additional disclosures based upon those exchange-traded products. They get certain protections on the stock exchanges.” Nonetheless, Gensler proceeded to caution:
But they should also, I would say, be aware it’s a highly speculative volatile underlying asset: bitcoin.
Meanwhile, criticism has been mounting against Gensler for his enforcement-centric approach to regulating crypto. There is a bill in Congress that aims to remove him as the SEC chairman. Many argue that he is not protecting investors, including veteran trader Peter Brandt who voiced his distrust in Gensler last month. In January, Ripple’s CEO labeled Gensler as a “political liability of the United States.”
What do you think about the statements by SEC Chair Gary Gensler? Let us know in the comments section below.
