Lawyer predicts even worse to come from the SEC

The growing popularity of the crypto market and the services provided by exchanges to address the global economic crisis have drawn the attention of government agencies around the world. As a result, regulatory actions and concerns have increased in tandem with the growth of the crypto industry.

The United States Securities and Exchange Commission (SEC) has intensified its regulatory actions against the crypto industry, with a recent emphasis on exchanges that fall under its jurisdiction and offer crypto-related “securities.” As a result, legal experts expect even stricter action from the SEC.

Tough road ahead for the crypto industry

According to Jesse Hynes, a pro-crypto attorney, many believe the crypto crash is here, and while the worst has yet to happen, Hynes believes it is imminent. However, Hynes claims that it will ultimately be beneficial for investors.

Hyne’s statement highlights the “deceptive” marketing practices that some crypto companies engage in to attract investors. Using phrases like “own,” “earn,” and “decentralized” are common “tools” used by these companies to create a sense of investment opportunity and community engagement.

However, Hynes points out that these “marketing tools” can be misleading, as they often do not reflect the true nature of the company or its operations. He further claims:

The answer is to protect these investors by actually giving them legal rights, entitlements and protections as a result of their purchases. This is coming. I think many crypto and NFT projects will be considered to have raised money in the form of collateral.

Jesse Hynes’ statement further clarifies that he is not insinuating that all non-fungible tokens (NFTs) or cryptocurrencies are securities, as the SEC has argued in various capacities. Instead, he points out that many were “packaged” and sold as part of a security offer during fundraising rounds.

Furthermore, Hynes argues that the regulatory system is “messed up and backwards”, which is ineffective when it comes to targeting the worst actors in the industry. Instead, he suggests that the better-known actors in the industry are more likely to be charged first.

This may be because they are more visible and “easier” to regulate, or because they have a higher public profile and are therefore more likely to attract the attention of regulators in the United States. He concluded:

Ultimately, I think we will end up where we were meant to be investor protection. The process of getting there will frankly suck and will be slow.

SEC ramps up encryption with more prosecutors

The Securities and Exchange Commission is facing several legal battles in the crypto industry, including the XRP lawsuit and allegations by Binance.US that it operates an “unregistered securities exchange.” The regulatory agency is allegedly is preparing to strengthen its enforcement capabilities with new hires.

This development signals a potential escalation in the SEC’s efforts to regulate the crypto industry and enforce compliance with securities laws. However, it is well known that the SEC has been dealing with criticism from the US Senate since October 2022.

For this, the SEC has faced criticism and challenges from various fronts in the crypto industry. This includes allegations by the Senate that SEC Chairman Gary Gensler has overstepped his authority and taken a hostile stance toward the industry. As a result, the SEC has experienced a staff exodus since mid-2022.

Nevertheless, a clear regulatory framework is key to the crypto industry’s sake, which will lead to further innovations and growth for the nascent sector, which provides opportunities and various services to its customers to withstand current and future financial crises.

Featured image from Unsplash, chart from TradingView.com