Gary Gensler, the Chairman of the SEC, Securities and Exchange Commission, responded against the news of the agency facing failure in enforcing rules to prevent malfeasance.
Gensler hinted that the unsuccessful FTX crypto exchange might have been in violation of the security laws. The violation is assumed to be by misusing the customer assets for trading with Alameda Research, the affiliated hedge of the exchange.
Gensler said that he cannot speak to any one case or any one situation, but their security laws state the need for the proper segregation of customer funds.
He continued that one should not be running a broker-dealer or a hedge fund, and an exchange. The New York Stock Exchange does not have a hedge fund on the side and trades against its customers.
He further continued to say that some crypto platforms have asked the SEC to continue the ability to lend, trade, and operate an exchange and a hedge fund under one company, which is something that the agency would not allow, as it is the custom under traditional securities laws.
Gensler quoted that the agency had denied and asked for the separation, and the agency had said no to those who came in to ask for the possibility of having a lighter touch regulation.
Gensler further went on and asserted that the basic message that he has had is the same public message as the private message. He appeals for the need to come into compliance. And that the field would not last long outside of public policy norms.
The attorneys of both parties have been accusing the SEC of the failure that FTX faced.
Elizabeth Warren, Senator of Massachusetts and fellow Democrat has asked the agency to suit up and said that federal agencies should make use of their expansive authority for cracking down on crypto frauds. Reportedly the Department of Justice and the SEC are conducting an investigation on FTX regarding criminal as well as civil violations.
Gensler had responded that he along with his agency is already suited up.
When it is the matter of crypto regulation Gary Gensler would not mention if the agency would or would not be writing new tailored rules for the next year in spite of the meltdown in crypto that has happened this year.
According to the statistics of Coinmarketcap it could be understood that the overall value of crypto assets has fallen down to around 840 billion USD as of the afternoon of Wednesday. It has reached this down from 2 trillion USD which was the value at the beginning of the year. Coinmarketcap is one of the globally followed crypto assets price-tracking websites.
The SEC Chair pressed that the agency would reinforce existing securities laws. He mentioned the SEC has gone as far as taking a total of 100 enforcement actions against the crypto firms of which a considerable number of steps were headed by the Chair, Gensler himself.
He added that by enforcing the already existing securities laws, the agency would be making the exchanges come in compliance with the law. And that it would not matter by what title they are operating, it could be crypto lenders or crypto exchanges.
The goal set by the Chair and the agency for the next year is to make all crypto exchanges and lending platforms comply with the securities laws.
Gensler added that the platforms could abide by these appropriately working with the SEC or in other cases the agency could continue on a course with more enforcement actions. He viewed the runway as getting shorter for all those who are not in compliance.
Gensler was asked why it was taking longer for the crypto exchanges to register with the SEC. For that question, he responded that the agency has been clear and that the agency could use some exemptive authority to tailor things, as people have said earlier somehow it would not be to drop the basic protection of separating out those businesses into a separate exchange.
Earlier in November of this year, FTX along with its many affiliated companies had filed for bankruptcy as per Chapter 11. The crypto exchange company also announced the resignation of its CEO, Sam Bankman- Fried.
Fried issued an apology through his Twitter handle following the bankruptcy announcement.