Crypto exchanges are in the hot seat as regulators look to crack down on the volatile asset class

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(Kitco News) – The 2022 crypto market collapse has been one of the most painful bear markets in the short history of this nascent asset class, as more than $2 trillion in value disappeared from the total market cap in a matter of months.

As a result of the widespread pain felt by traders in the US and around the world, the US government has finally begun to get serious about regulating the industry, as evidenced by the introduction of a bill to classify Bitcoin (BTC) and Ethereum ( ETH) which lasts on Wednesday.

On Friday, Forbes released a report that provides further evidence that regulators are zeroing in on some of the biggest players in the crypto industry when it revealed that every US cryptocurrency exchange – along with the largest exchange in the world Binance – is currency in various stages of being investigated by the US Securities and Exchange Commission (SEC).

This development, which was shared with Forbes by a staffer from US Senator Cynthia Lummi’s (R-Wy) office, comes after widely circulated reports that the largest US-based crypto exchange Coinbase is under investigation following allegations of insider trading by members of the company. staff.

With more than 40 cryptocurrency exchanges based in the US, this marks a major escalation in the regulatory assault on the historically volatile and unregulated crypto market that has been known to rise exponentially only to be followed by a 90-95% collapse in prices.

As noted in the following tweet from Swan Bitcoin CEO Cory Klippsten, it is highly likely that many of the exchanges in question have received Wells Notices, formally informing them that they are under investigation and that lawsuits may be filed against them.

“A senior executive at a major crypto exchange said that based on chatter he’s hearing from members of the SEC, many US crypto exchanges have likely received Wells Notices to formally inform when a case is about to be filed against them, and that most are under investigation.” https://t.co/BPkZDTCi3c

— Cory Klippsten (@coryklippsten) 5 August 2022

The revelation of increased enforcement actions comes as the industry has suffered a collapse in confidence following the implosion of the decentralized finance protocol Terra and its widely integrated TerraUSD (UST) stablecoin.

The fallout from Terra’s demise sent shockwaves through the ecosystem and has claimed many victims, including Three Arrows Capital, a Singapore-based cryptocurrency hedge fund that was ordered to wind up on June 27 by a court in the British Virgin Islands. Other notable casualties include crypto brokerage firm Voyager Digital and crypto lending platform Celsius Network, both of which have filed for Chapter 11 bankruptcy protection.

And it’s not just US regulators who have jumped on the regulatory bandwagon as the India-based WaxirX exchange has reportedly had its assets frozen by the country’s authorities amid an ongoing investigation into suspected violations of foreign exchange regulations.

India’s Financial Crimes Enforcement Agency said on Friday it has frozen the assets of WazirX, owned by Binance, as part of its investigation into suspected violations of foreign exchange regulations.https://t.co/Zm7gKkb3AC#wazirx #Crypto

— Crypto Lion (@Crypto_Iion) 5 August 2022

With more regulations on the way, crypto companies and market players are starting to comment that the “Wild West” days of cryptocurrencies are coming to an end.