Gary Gensler teases details of SEC’s $5 billion enforcement action, shades crypto

US Securities and Exchange Commission (SEC) chief Gary Gensler's speech before the 2023 Securities Enforcement Forum shed light on the regulator's enforcement activities, which have resulted in $5 billion in judgments and orders. However, Gensler's dig into the cryptocurrency market has become the talk of the crypto community on social media. I won't even name the individuals we sued in this highly unregulated field.

In an economic perspective of SEC enforcement action, the agency recorded more than 780 enforcement actions in 2023, including more than 500 independent cases. The enforcement action resulted in a total of $5 billion in judgments and orders, of which $930 million was distributed to injured investors.

Gensler added that since December 2021, the SEC has filed charges against 40 firms for violating various laws and regulations, resulting in more than $1.5 billion in fines. Gensler said the SEC settled recordkeeping-related charges with 23 firms last fiscal year alone.

In his speech, the SEC chief reiterated his previous stance on crypto, saying that most of the crypto market falls under the securities bracket and, therefore, should be governed by the same rules. In his explanation of the broad definition of security, Gensler explains the concept of an “investment contract” and why a major part of the cryptocurrency market likes it. According to Gensler, most cryptocurrency assets will pass the investment contract test, making them governed by securities regulations.

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Gensler went on to draw comparisons between the current crypto ecosystem and the financial landscape of the 1920s, when securities laws were not in place. Gensler said that before clear regulations were put in place, the crypto ecosystem was suffering from the same situation as the financial landscape, leading to many frauds, frauds and losses. They argued that these cases require stricter regulations.

“Without prioritizing an asset, most crypto assets can meet the investment contract test, making them subject to securities laws.”

The SEC chief's criticism of the crypto market is not new, and he has repeated the same stance for several years now. However, the crypto community, including some key businesses operating in the US, along with members of Congress, have called on Gensler to provide more clarity on crypto regulations.

Magazine: How to protect your crypto in a volatile market — Bitcoin OGs and experts weigh in.