Mark Cuban warns bitcoin, crypto face looming SEC ‘nightmare’
Tightened SEC regulation of the cryptocurrency industry represents a potential “nightmare” for the struggling sector, whose prices have already been hit by rising interest rates and recession fears, billionaire Mark Cuban warned on Twitter.
Cuban issued his dire warning in response to a tweet from Sen. Pat Toomey (R-Pa.), who had slammed the SEC after it filed insider trading charges against a former Coinbase chief product officer.
The senator said the SEC took an enforcement action without clarifying why it considers certain digital coins to be “securities” similar to stocks or bonds.
“Yesterday’s enforcement action is the perfect example of the SEC taking a clear view on how and why certain tokens are classified as securities,” said Toomey, ranking member of the Senate Banking Committee. “Yet the SEC failed to disclose their views before taking enforcement action.”
“Do you think this is bad? Wait till you see what they come up with for token registration,” Cuban tweeted in response to Toomey. “That’s the nightmare that awaits the crypto industry. How else do you keep thousands of lawyers employed and create reasons to ask for more taxpayers’ money?”
Posten has contacted the SEC for comment.
The possibility of requiring registration of cryptocurrencies as a form of security is a matter of intense debate as the Fed considers potential regulations for the industry. The debate intensified last week after the SEC unveiled insider trading charges against ex-Coinbase employee Ishan Wahi, as well as his brother and a friend.
The feds allege the trio used confidential information to buy up cryptocurrencies just before the public knew Coinbase would list them on its platform. The alleged scheme generated more than $1 million in profits.
The SEC said it considers at least nine of the 25 tokens the trio bought to be securities — a definition that could open up Coinbase and other crypto platforms to much stricter federal scrutiny and regulation.
Coinbase, which cooperated with the federal investigation and eventual arrest of its ex-employee, nevertheless criticized the SEC’s handling of the situation.
“Seven of the nine assets included in the SEC’s charges are listed on Coinbase’s platform. None of these assets are securities,” the company said in a blog post. “Coinbase has a rigorous process to analyze and evaluate each digital asset before it is made available on our exchange – a process that the SEC itself has reviewed.”
Cuban has frequently clashed with the SEC in the past — once defeating the agency in court after it accused him of participating in an insider trading scheme.
