As the U.S. Securities and Exchange Commission continues to scrutinize the crypto industry, the company’s director of enforcement, Gurbir Grewal, says the regulator will not be involved with labels or expertise, however whether or not securities are being offered in a format that adheres to present legal guidelines.
During an interview at an occasion hosted by Rutgers University’s School of Law and legislation agency Lowenstein Sandler final Friday, Grewal mentioned the SEC is “concerned with the offerings” in crypto markets.
“When we look underneath the hood, when we kick the tires, we’ve seen plenty of DeFi products [and] DeFi offerings that are neither decentralized nor finance, but rather just straight fraud,” Grewal mentioned. “We’ve seen plenty of stablecoins that are neither stable nor coins, but [are] fraudulent.”
The director of enforcement additionally highlighted that crypto services like protocols and sensible contracts are supposed to guard in opposition to market manipulation and fraud, however haven’t. “You can call it crypto… it doesn’t matter what you call it. It’s the substance and reality of what you’re offering. And if that offering needs to be registered and you’re not registering it, we’ll hold you accountable,” he mentioned.
Earlier this month, the SEC charged the two largest crypto exchanges, Binance and Coinbase, for securities legislation violations in back-to-back instances, as effectively as different prices.
Grewal mentioned the company prosecuted the exchanges as a result of it has “to be thoughtful in the cases we bring that will have the most impact and deter other bad actors [while] promoting compliance.”
More broadly, he considers the dangers in the crypto market to be “too great, as we’re seeing a precipitous decline in the crypto markets, and investors are being hurt on the back end of it.”
While many individuals in the crypto industry have referred to the actions as “regulation by enforcement,” Grewal doesn’t really feel so. “It’s a catchy but tired refrain. What we’re doing is enforcing existing rules and regulations.”
Many firms in the web3 house disagree.