America's Federal Regulators Are Preparing More Lawsuits Against Crypto Companies

A "string of legal victories" by America's market-regulating Securities and Exchange Commission "has jolted some of crypto's biggest players," reports Politico — even as they're seeking more credibility with U.S. lawmakers: Judges have recently rebuked claims that the SEC lacks authority to police the market. Coinbase, the largest U.S. exchange, lost a bid to throw out charges that it is violating investor-protection rules. And a New York jury found one-time billionaire entrepreneur Do Kwon and his firm liable for fraud. Now, the crackdown is about to expand, with the SEC preparing for a new round of lawsuits. "The SEC just keeps winning," said John Reed Stark, a former agency attorney and prominent crypto critic. "The law is catching up...."

[I]t's the SEC crackdown that is raising foundational questions about crypto's future. [SEC Chairman Gary] Gensler has been among the industry's most implacable foes, saying most crypto tokens are unregistered securities that are being sold illegally and blasting the industry as "rife with fraud, scams, bankruptcies and money laundering." His opposition has been so unwavering that many in the industry are holding out hope that he leaves the agency after the November elections...

[T]he SEC's enforcement sweep appears to be on the brink of spreading across the crypto world. Consensys is facing potential charges from the agency, according to the company's lawsuit. And the SEC recently warned Uniswap Labs, a decentralized finance company that created one of the world's largest DeFi exchanges, that staff was preparing to sue.

Uniswap executives have vowed to fight the agency in court.

Re:

[bn-7bc]

Unfortunately , for the bro scammers" crypto isn't big enugh yet to pose significant systemic risk, ans since vety few people are @ctually employed dealing with crypto, I see a very low chance ( that is risk to the taxpayers) thet there will be any crypto related bailouts unless ofc the crypto related derivatives market takes off, remember it was a heady mix of fraudulent loans an credit derivatives ( helped by the credit rating agencies an kax regularion) that blew up in 2008( all those CLOs, CDOs etc)

Re:

[alvinrod]

I'm fairly sure you're replying to a meme post. I recall seeing this posted (pretty much verbatim) on Slashdot before in a different story.

I don't think it has any real sense understanding of how crypto currencies actually work, as much of what is proposed isn't really possible, or requires making unfounded assumptions.

I don't understand why anyone using crypto would put it in an exchange. There's little to no regulation so you're essentially operating entirely on trust with someone you probably don't

Re:

[jacks smirking reven]

I don't understand why anyone using crypto would put it in an exchange.

exchange crypto for some other currency

Because this is all but a tiny sliver of the crypto world cares about, actual USD or other currency and increasing that amount. Regulating it like any other financial instrument makes perfect sense to me.

People who think cryptocurrency is inherently evil have never had to live in a country with an ineffective or unstable monetary policy.

Computer programs can never be inherently evil, nor really are the people using them but fact is this type of thing is used as cover while again, the 99% are just using it as a betting token.

I feel for those people but those situations existed and were worked around before Bitcoin and will continue to after

Re:

[RossCWilliams]

Count me as skeptical there will be a "meltdown" when all the early adopters bail at once. The more likely scenario is a lot of meltdowns similar to what we have already seen. For the "whales" it makes no sense to bail all at once since they would be leaving way too much value on the table. There will simply be repeated pump and dumps with an ever increasing bottom price as people buy into the market at higher prices and refuse to sell at a loss. Eventually there won't be any new buyers and the price will s

Re:

[ceoyoyo]

There might be some big crashes when the vast majority of miners bail because the effort / coin gets too high.

Re:

[jacks smirking reven]

Is there a video from the Washington Free Beacon that does in fact explain why the government borrows money when it can in fact also print it? Also why is he talking about MMT when that's not in the video question? I feel like this is edited weirdly but I would have to watch the entire documentary here to begin to defend Bernstein here who does look silly for sure.

Anyway here's 'an' answer via the simplest of google searches. There are other reasons like the fact that as I understand it Congress can spend

Re:

[mysidia]

Maybe so... A big issue would appear to be the "Decentralized" part of DeFi Is not actually that decentralized.

So long as there is an Identifiable corporation running transactions that has access to the assets And can be targeted by a lawsuit;
it's not really "De-centralized" finance, now is it?

Re:

[phyrz]

The great thing about SEC vs Uniswap is that they are taking on a fully decentralised app. Uniswap labs has absolutely no control over the transactions that take place on the uniswap contracts, yet the SEC wants to paint them as money transmitters. It will be very interesting to see how it all unfolds.

GOOD!

[Kisai]

(Grumpy Cat - GOOD)

In all seriousness, very little crypto is coming from or being used by legitimate sources. These companies know they are dealing with criminals and that's why they are still in it. If they were to scrutinize their customers they would realize they have almost none.

Re: GOOD!

[reanjr]

Not even close to true. Best estimates are somewhere around 1% is illicit.

https://www.chainalysis.com/bl... [chainalysis.com]

Re:

[Angry Coward]

That depends on your definition of illicit. That 1% figure is a best case number. We have evidence beyond reasonable doubt that all those transactions are criminal in nature. There is credible evidence that a great many more transactions are illegal, but only things which have been proven illicit within a very narrow range are considered illicit by chainalysis. Even most known scams are excluded by their methodology. If I look at web3isgoinggreat, it has 9.7 trillion in known losses to crypto scams and

Re:

[phyrz]

LOL 9.7T when the total crypto market cap is only 2.5T.

Re:

[AleRunner]

Obviously they don't hold the crypto for long since the fraudsters want to cash it into something actually useful. Even if they held the crypto for a month, which is rediculously long, that would only account for 1/3 of market cap

365 * (2.5/9.7) / 3 = 31.3

Re: GOOD!

[reanjr]

So you freely admit you are using some private nonsensical definition of "illicit" that has no relationship to the real world laws that define illicit behavior. Good to know.

I'm switching to tulips

[KeithH]

https://en.wikipedia.org/wiki/... [wikipedia.org]

At least my wife is happy when I give her flowers.

Prepared to cut some folks loose.

[Petersko]

At this point if you gamble and lose in crypto, you shouldn't be afforded any particular protections. Sucks to be you. Now, if you should happen to be inadvertently involved - say, you're invested in a vehicle that doesn't clearly disclose they dabble in crypto - I think the path to responsibility is less clear.

But for the most part, buyer beware. This isn't five years ago. Any investor getting involved at this point has plenty of information available to them to decide whether or not to engage. If they insist on being an uneducated (dumb) participant, it's a choice. This industry wears it's malfeasance directly on its sleeve.

Regulate all you like. Dog fighting is illegal too. But don't do it on behalf of those poor duped investors - they're actively making their choices. They have no excuse.