Connect with us

SEC

SEC Probe against Terraform Labs, yet another unregistered security fiasco

Published

on


The Securities and Exchange Commission (SEC) has approached the court, seeking an order compelling the Terraform Labs, and its co-founder and CEO, Do Kwon, to produce required documents and issue a testimony for the SEC’s former investigative subpoenas regarding the company’s Mirroring feature.

According to the SEC, Terraform Labs Mirror Protocol’s mAssets that “mirror” the price of U.S. securities, and obtain Mirror’s “governance tokens” – MIR, could potentially be violating the federal securities laws by making unregistered offer or sale of securities, and selling security-based- swaps outside of a national security exchange, along with acting as an unregistered broker or dealer, as well as engaging in securities transactions by an unregistered investment company.

However, despite repetitively getting served with investigative subpoenas, Terraform Labs has refused to produce any documents, together with Kwon’s failure to comply with the testimonial obligations.

Advertisement

“With no legitimate basis, respondents Terraform and Kwon have refused to produce documents and Respondent Kwon has refused to testify in response to two Commission subpoenas…(They) should not be permitted to thwart the Commission’s investigation,” Bloomberg quoted SEC’s filing in the federal court in Manhattan.

Terraform Sues the SEC

Both, the individual defendant, Do Kwon, and Terraform Labs have also filed a case against the SEC last month, suing the commission for violating SEC rules along with the defendant’s individual rights under the U.S. Constitution by serving the subpoenas on him at a New York crypto industry conference.

“The SEC does not address its failure to follow its own rules, and its filings do not deny that it failed to obtain a specific order authorizing service on Do…Ultimately, the court will decide whether the SEC acted properly.”, Bloomberg quoted comments from Terraform dated Friday.

This is not the first time that the community has witnessed the building up of baseless arguments, backing the SEC’s unregistered securities stance in a case. While Terraform Labs is determined to stay out of the regulatory black hole, it may as well find itself deep in the black waters like Ripple.

News Source

Advertisement

SEC

SEC Chairman Gary Gensler Stresses Crypto Markets Are Open to Manipulation, Investors Vulnerable

Published

on

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has called for more investor protection in crypto markets. “This asset class is rife with fraud, scams, and abuse in certain applications,” he said. “In many cases, investors aren’t able to get rigorous, balanced, and complete information on tokens or trading and lending platforms.”

Gary Gensler Wants More Investor Protection in Crypto Markets

SEC Chairman Gary Gensler raised concerns about the cryptocurrency markets at an Investor Advisory Committee meeting last week.

The Investor Advisory Committee, established by Section 911 of the Dodd-Frank Act, advises the SEC on regulatory priorities, including “initiatives to protect investor interests and to promote investor confidence and the integrity of the securities marketplace.”

Advertisement

During his speech, Gensler shared some concerns regarding the crypto markets.

He began by acknowledging that “Satoshi Nakamoto’s ‘Bitcoin Whitepaper’ and the crypto markets that followed have been catalysts for change.” In August, Gensler said Bitcoin’s pseudonymous creator’s “innovation is real” and “it has been and could continue to be a catalyst for change in the fields of finance and money.”

Citing the market cap of all cryptocurrencies, Gensler told the Investor Advisory Committee: “This is an asset class that belongs inside public policy frameworks of looking after investors, guarding against illicit activity, and protecting our financial stability.” He opined:

Advertisement

Unfortunately, this asset class is rife with fraud, scams, and abuse in certain applications … In many cases, investors aren’t able to get rigorous, balanced, and complete information on tokens or trading and lending platforms.

“Right now, we just don’t have enough investor protection in crypto,” the SEC boss described. “The American public is buying, selling, and lending crypto on trading, lending, and decentralized finance (defi) platforms, where there are significant gaps in investor protection.” He stressed:

This leaves markets open to manipulation. This leaves investors vulnerable. If we don’t address these issues, I worry a lot of people will be hurt.

Gensler proceeded to explain that many crypto “tokens are offered and sold as securities.” Commenting on whether a token is considered as a security, he said: “There’s actually a lot of clarity on that front. In the 1930s, Congress established the definition of a security, which included about 20 items, like stock, bonds, and notes.”

The SEC chairman continued: “One of the items is an investment contract,” noting that many tokens in the crypto markets “may be unregistered securities, without required disclosures or market oversight.”

Advertisement

Gensler opined:

It’s best not to wait for a big spill on aisle three — the crypto aisle, with all its tokens, trading and lending going on — to clean up the investor protection issues.

The SEC chair concluded his speech by stating that crypto platform operators and token issuers should “come in and talk to the staff at the SEC.”

He added: “Financial innovations throughout history don’t long thrive outside of our public policy frameworks. If this field is going to continue, or reach any of its potential to be a catalyst for change, we’d better bring it into public policy frameworks.”

Advertisement

News Source

Continue Reading

SEC

SEC’s Investor Advisory Committee to Discuss Crypto on December 2

Published

on

  • SEC’s Investor Advisory Committee will soon discuss crypto and digital assets today.
  • This is to ensure serene investor protection and market integrity in the face of new technologies.

The US SEC’s Investor Advisory Committee is on its heels to discuss their nagging concern about crypto and ‘Investor Protection’ on December 2, 2021.

Truth be told, the panel will highlight all the ins and outs of digital assets with a special focus on the regulatory framework that governs them. With no exemption, the authority will take on this event to explore and identify the main lines of intersection of digital assets, sooner rather than later.

They hope to do this with a specific lens to examine the ups and downs of the market issues. Prior to this, the committee will further define the compounding risk and its associated dangers in the emerging technologies in the crypto market.

Advertisement

On this note, apart from the crypto discussion, the panel will address various topics regarding blockchain technology, stablecoins, and crypto-based ETFs. All these topics will be treated publicly in one holistic manner under the event.

Moreover, the meeting agenda is quite a solid move that seeks to ensure smooth market integrity. In essence, it aims to also empower a good outlook when it comes to investors’ protection, particularly in the face of new technology.

People think that this occasion is a good opportunity for the SEC to rethink and restructure its harsh crypto regulation approach.

Advertisement

News Source

Continue Reading

SEC

SEC Chair: Innovation Around DeFi “Could Be Real”

Published

on

Gary Gensler believes that DeFi could offer “real innovation,” but he is convinced that the sector will not survive without regulatory compliance.

U.S. Securities and Exchange Chair Gary Gensler said that new technologies do not tend to persist if they fail to come into compliance with the law during a fireside chat with Jay Clayton at the Digital Asset Compliance & Market Integrity Summit.

While Gensler believes that decentralized finance could be the source of innovation, he claims that it has to fall within the existing regulatory framework:

The innovation around DeFi could be real, but they won’t persist if they stay outside of the regulatory framework.

Gensler also voiced his concerns about the centralization of some DeFi projects and implied that the goal of such projects might be to skirt existing anti-money laundering laws.

Speaking of the regulator’s reluctance to approve a spot Bitcoin exchange-traded fund, Gensler told No. 42 that trading around the globe is not inside the U.S. regulatory register. He urged the trading and lending platform to “come in and talk”:

Advertisement

Trading and lending platforms are really in an important place for investor and consumer protection. Come in and talk to us… work with us. Where appropriate we’ll use the enforcement tool. Work to get registered with the law.

The SEC boss has reiterated that stablecoins remind him of poker chips at a casino:

[Stablecoins] made it more efficient within the ecosystem. But it also allowed people around the globe, the people who tried to, to avoid money laundering and tax compliance in jurisdiction after jurisdiction.

According to Gensler, stablecoins are responsible for 80% of trading on the crypto market.

News Source

Advertisement
Continue Reading