SEC

SEC Chairman Gary Gensler Stresses Crypto Markets Are Open to Manipulation, Investors Vulnerable

06/12/2021 by Idelto Editor

SEC Chairman Gary Gensler Stresses Crypto Markets Are Open to Manipulation, Investors Are Vulnerable

The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has called for more investor protection in crypto markets. “This asset class is rife with fraud, scams, and abuse in certain applications,” he said. “In many cases, investors aren’t able to get rigorous, balanced, and complete information on tokens or trading and lending platforms.”

Gary Gensler Wants More Investor Protection in Crypto Markets

SEC Chairman Gary Gensler raised concerns about the cryptocurrency markets at an Investor Advisory Committee meeting last week.

The Investor Advisory Committee, established by Section 911 of the Dodd-Frank Act, advises the SEC on regulatory priorities, including “initiatives to protect investor interests and to promote investor confidence and the integrity of the securities marketplace.”

During his speech, Gensler shared some concerns regarding the crypto markets.

He began by acknowledging that “Satoshi Nakamoto’s ‘Bitcoin Whitepaper’ and the crypto markets that followed have been catalysts for change.” In August, Gensler said Bitcoin’s pseudonymous creator’s “innovation is real” and “it has been and could continue to be a catalyst for change in the fields of finance and money.”

Citing the market cap of all cryptocurrencies, Gensler told the Investor Advisory Committee: “This is an asset class that belongs inside public policy frameworks of looking after investors, guarding against illicit activity, and protecting our financial stability.” He opined:

Unfortunately, this asset class is rife with fraud, scams, and abuse in certain applications … In many cases, investors aren’t able to get rigorous, balanced, and complete information on tokens or trading and lending platforms.

“Right now, we just don’t have enough investor protection in crypto,” the SEC boss described. “The American public is buying, selling, and lending crypto on trading, lending, and decentralized finance (defi) platforms, where there are significant gaps in investor protection.” He stressed:

This leaves markets open to manipulation. This leaves investors vulnerable. If we don’t address these issues, I worry a lot of people will be hurt.

Gensler proceeded to explain that many crypto “tokens are offered and sold as securities.” Commenting on whether a token is considered as a security, he said: “There’s actually a lot of clarity on that front. In the 1930s, Congress established the definition of a security, which included about 20 items, like stock, bonds, and notes.”

The SEC chairman continued: “One of the items is an investment contract,” noting that many tokens in the crypto markets “may be unregistered securities, without required disclosures or market oversight.”

Gensler opined:

It’s best not to wait for a big spill on aisle three — the crypto aisle, with all its tokens, trading and lending going on — to clean up the investor protection issues.

The SEC chair concluded his speech by stating that crypto platform operators and token issuers should “come in and talk to the staff at the SEC.”

He added: “Financial innovations throughout history don’t long thrive outside of our public policy frameworks. If this field is going to continue, or reach any of its potential to be a catalyst for change, we’d better bring it into public policy frameworks.”

What do you think about SEC Chairman Gary Gensler’s comments on investor protection and crypto market manipulation? Let us know in the comments section below.

US SEC Charges Man With Defrauding Crypto Investors in Two Digital Asset Securities Offerings

04/12/2021 by Idelto Editor

The U.S. Securities and Exchange Commission (SEC) has charged a citizen of Latvia with defrauding investors in two crypto offerings. The fraudster “used fake names, fictitious entities, and fraudulent profiles to perpetrate his schemes, and misappropriated nearly all of the investor funds that were raised.”

Two Fraudulent Crypto Schemes

The SEC announced Thursday that it has “charged a Latvian citizen with defrauding hundreds of retail investors out of at least $7 million through two separate fraudulent digital asset securities offerings.”

Noting that Ivars Auzins defrauded U.S. and foreign investors, the securities watchdog explained:

Auzins allegedly used fake names, fictitious entities, and fraudulent profiles to perpetrate his schemes, and misappropriated nearly all of the investor funds that were raised.

His first scheme ran from January through March 2018. “Auzins fraudulently offered and sold unregistered digital tokens as part of an ICO [initial coin offering] of Denaro, a purported multi-currency debit card platform,” the SEC detailed.

The complaint alleges that “all of the claimed products or services being offered were fictitious, including the relationship with the credit card issuer,” noting that “Auzins misappropriated all of the ICO’s proceeds.”

His second scheme ran from April through July 2019. “Auzins fraudulently offered the unregistered securities of Innovamine, which purportedly offered a cloud mining program,” the SEC described, adding that he “misappropriated nearly all of the funds raised in the offering.”

The securities regulator detailed:

As we allege, Auzins was engaged in a brazen scheme to defraud retail investors under the guise of profitable digital asset opportunities.

The Latvian citizen is charged with “violating the antifraud and registration provisions of the federal securities laws.” The SEC “seeks permanent injunctions, including conduct-based injunctions, disgorgement plus prejudgment interest, civil penalties, and an officer-and-director bar against him.”

What do you think about this case? Let us know in the comments section below.

Jailed Onecoin Mastermind Accused of Using Contraband Mobile Phone to Move $20 Million

25/11/2021 by Idelto Editor

Karl Sebastian Greenwood, one of the masterminds behind the Onecoin pyramid scheme, recently used a contraband mobile phone to move at least $20 million while holed up in a prison in the United States, an attorney for one of the scheme’s victims has said.

Onecoin Mastermind Taking Advantage of Regulators’ Failures

The lawyer representing victims of the Onecoin scam, Jonathan Levy, has alleged that the pyramid scheme’s jailed co-mastermind, Karl Sebastian Greenwood, recently moved at least $20 million which he insists was stolen from investors.

In a statement released on November 24, 2021, Levy explains how Greenwood, who is currently detained at Manhattan Metropolitan Correctional Center, was able to pull off the transfer. He said Greenwood had been aided by a network of lawyers and a contraband cellphone.

The lawyer also said the failure of the SEC and other regulators to confiscate assets and the 230,000 bitcoins stolen from Onecoin is aiding Greenwood’s cause while making it even more difficult for victims to recover their money. He explained:

I am shocked and dismayed there has been no attempt to confiscate OneCoin assets. We know that vast amounts of cash, real estate, and cryptocurrency have been unlawfully obtained. The brazen acts of Karl Sebastian Greenwood from his jail cell only confirm our worst fears that with every passing day, billions of dollars of assets are being placed beyond hope of recovery.

Contraband Cell Phone

Using numerous Powers of Attorney that were issued in Dubai, Greenwood and Ruja Ignatova, another key mastermind behind the Onecoin pyramid scheme, have successfully managed to get banks to unfreeze bank accounts that held hundreds of millions of dollars. Greenwood allegedly then used a mobile phone that is now in the possession of U.S. law enforcement to remotely execute judgment.

Meanwhile, Levy said he hopes the release of the information about some of Greenwood’s acts while in prison will force regulators in the United States, Bulgaria, and Dubai to finally act against the masterminds.

Do you agree that regulators have not done enough to help the victims of the Onecoin scam? Tell us what you think in the comments section below.

Coinbase Pushes for Single Crypto Regulator: CEO Says ‘We Have 53 Regulators in Just One Country, the US’

15/11/2021 by Idelto Editor

Crypto exchange Coinbase has been meeting with a number of regulators to convince them that the U.S. should have just one federal regulator overseeing the crypto sector. Currently, there is a variety of different regulators in the U.S., CEO Brian Armstrong explained, noting that Coinbase has “53 regulators in just one country, the United States.”

Coinbase Wants One Regulator in the US

The Nasdaq-listed cryptocurrency exchange Coinbase is pushing for the U.S. to have just one crypto regulator.

“We’ve met with a number of different regulators out there … on a regular basis … I had a meeting last week with the chairman of the SEC, Chair [Gary] Gensler, which I think was very productive,” Coinbase CEO Brian Armstrong said during the company’s Q3 earnings call last week.

“There’s a variety of different regulators in the United States … There’s the CFTC [Commodity Futures Trading Commission], the SEC [Securities and Exchange Commission], the Treasury. And then, of course, we have state regulators as well on money transmission licenses and lending licenses,” he added.

Noting that Coinbase serves customers in more than 100 countries, Armstrong opined:

It’s kind of amazing that we, Coinbase, have 53 regulators in just one country, the United States.

The CEO proceeded to reference the crypto regulatory proposal Coinbase published in October. The Digital Asset Policy Proposal (DAPP) recommends having one single federal regulator in the U.S.

“It could be underneath one of the existing regulators. It doesn’t have to be a completely new entity, but it’d be nice to consolidate it a bit and use that as a way to enable more innovation in this space,” Armstrong continued, emphasizing that having many regulators really harms startups in the space.

“Our goal right now is to get our regulator focused on crypto,” said Coinbase’s chief financial officer (CFO), Alesia Haas.

She explained that “the technology is just so different,” noting that it can eliminate the need for some traditional financial services. The CFO opined:

We think that having a single regulator, who really deeply understands the technology and then helps bring what the new principles for financial regulation in crypto look like, will be helpful.

Do you agree with Coinbase that the U.S. should just have one crypto regulator? Let us know in the comments section below.

SEC Rejects Vaneck Bitcoin Spot Market ETF Over Price Manipulation Concerns

12/11/2021 by Idelto Editor

On Friday, November 12, the U.S. Securities and Exchange Commission (SEC) rejected Vaneck’s bitcoin spot market exchange-traded fund (ETF). The U.S. regulator noted that the denial was due to the lack of prevention toward “fraudulent and manipulative acts and practices.”

SEC Turns Down Spot Market ETF – US Regulator Believes There Should be More Manipulation Protection for Investors

Following the approval of a few bitcoin ETFs that leverage future markets, the SEC has rejected Vaneck’s bitcoin spot market ETF on Friday. So far, the U.S. regulator has not approved any bitcoin ETFs that are tethered to spot market prices.
In its ruling, the SEC explains spot market ETF offerings have not “met its burden” when it comes to “[protecting] investors and the public interest.” The Vaneck ETF was turned down over “the requirement that the rules of a national securities exchange be “designed to prevent fraudulent and manipulative acts and practices.”
For one, standards need to include “surveillance-sharing agreements,” as they “provide a necessary deterrent to manipulation because they facilitate the availability of information needed to fully investigate a manipulation if it were to occur,” the SEC ruling details.
The SEC also cited the denial of the Winklevoss ETF the two investors tried to get approved years ago. In the case of most commodity-trust ETPs, the fund must enter into some kind of “surveillance-sharing agreements” or “Intermarket Surveillance Group (“ISG”) membership” tied to the type of market, the U.S. regulator’s ruling explains.

The ruling details that the fund BZX believes “such manipulation concerns have been sufficiently mitigated, and that the growing and quantifiable investor protection concerns should [be] sufficient to justify dispensing with the requisite surveillance-sharing agreement.”
The SEC ruling concludes that the central consideration right now for the regulator is the “potential manipulation of bitcoin.”

What do you think about the SEC denying Vaneck’s bitcoin spot market ETF? Let us know what you think about this subject in the comments section below.