SEC Pursuing Action Against Crypto Firms, Including DeFi Platforms
The US Securities and Exchange Commission (SEC) is taking action against several firms in the crypto industry, including centralized companies like Coinbase and Binance. However, the agency has not ruled out prosecuting decentralized finance (DeFi) platforms. David Hirsch, head of the SEC’s Crypto Assets and Cyber Units, confirmed this during a speech at a conference in Chicago. He emphasized that the label of “DeFi” will not deter them from their work. Although the agency does not have enough resources to prosecute all tokens that violate securities laws, it remains committed to enforcing regulations.
SEC’s History in DeFi Enforcement
In its first action against a DeFi platform, the SEC charged Gregory Keough, Derek Acree, and their company Blockchain Credit Partners for selling unregistered securities. The defendants agreed to cease operations and pay disgorgements and penalties. The SEC’s enforcement actions in 2022 were primarily focused on Initial Coin Offerings (ICOs), which the agency considers unregistered securities offerings.
Recent Actions Against LBRY and PulseChain
The SEC has also filed actions against LBRY, a decentralized content creation platform, and Richard Heart, founder of the PulseChain ecosystem. The agency won its litigation against LBRY after courts determined that its LBC token was an unregistered security.
SEC Suggests Binance and Coinbase Were Just the Start
Crypto companies often choose to litigate instead of settling with the SEC, which strains the agency’s enforcement resources. Earlier this year, the SEC sued Binance for alleged regulatory deception and mismanagement of customer funds. It also filed an enforcement action against Coinbase for operating as an unregistered broker-dealer. The SEC is currently investigating intermediaries in the crypto industry, such as brokers, dealers, and exchanges, who have failed to meet investor disclosure and regulatory requirements.
Hot Take: SEC’s Ongoing Efforts to Enforce Crypto Regulations
The SEC continues to actively pursue enforcement actions against crypto firms, including both centralized companies and decentralized DeFi platforms. Despite resource limitations, the agency remains committed to upholding securities laws in the crypto industry. While some firms choose to litigate, the SEC is determined to hold them accountable for their actions. As the regulatory landscape evolves, it is crucial for all entities operating in the crypto space to ensure compliance with investor disclosure and regulatory requirements. The SEC’s actions send a clear message that no aspect of the industry will be exempt from scrutiny and potential enforcement.
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