Gary Gensler, Chair of the United States Securities and Exchange Commission (SEC), unveiled significant details about the SEC’s enforcement actions, which have amounted to a total of $5 billion in judgments and orders. However, it was Gensler’s pointed remarks about the cryptocurrency market that garnered attention during his speech at the 2023 Securities Enforcement Forum. He remarked, “Don’t get me started on crypto. I won’t even name all the individuals we’ve charged in this highly noncompliant field.”
Gensler emphasized the economic impact of the SEC’s enforcement actions in 2023, citing more than 780 actions taken, including over 500 standalone cases. These actions resulted in judgments and orders totaling $5 billion, with $930 million being distributed to investors who were harmed.
Furthermore, Gensler revealed that the SEC had initiated lawsuits against 40 firms for violations of various rules and regulations since December 2021, resulting in penalties exceeding $1.5 billion. He highlighted that in the past fiscal year alone, the SEC had settled charges related to record-keeping with 23 firms.
Gensler reiterated his longstanding position on cryptocurrency, asserting that a significant portion of the crypto market should be classified as securities and regulated accordingly. He expounded on the concept of an “investment contract” and its relevance to the crypto market, contending that most cryptocurrency assets could be categorized as investment contracts, subjecting them to securities regulations.
He drew parallels between the current cryptocurrency ecosystem and the financial landscape of the 1920s when securities laws were not yet established. Gensler argued that the crypto market faces similar challenges to those of the early 20th century, including scams, fraud, and bankruptcies, necessitating stricter regulations.
“Without prejudging any one asset, the vast majority of crypto assets likely meet the investment contract test, making them subject to the securities laws.”
Gensler’s critical stance on the cryptocurrency market is not new and has been a consistent point of emphasis. However, there is a growing demand from members of Congress, the cryptocurrency community, and businesses operating within the U.S. for greater clarity and comprehensive regulations in the crypto space.