A former senior official with the US Securities and Exchange Commission (SEC) believes digital asset investors should “get out of crypto platforms now”.
John Reed Stark, who founded the SEC’s Office of Internet Enforcement and served as its chief for 11 years, say crypto exchanges are under “a US regulatory/law enforcement siege that has only just begun.”
Stark notes that he has been an SEC critic in the past, but believes the regulator’s recent crypto enforcement actions have been “spot on”.
“Whatever the carnival barkers promise, it is axiomatic that crypto trading platforms are risky, dangerous and inherently insecure.”
The former SEC official states that there is a “gap” of necessary investor protections among crypto exchanges, resulting in a lack of requirements related to record keeping, cybersecurity, codes of conduct, customer complaints and order flow transactions.
Reed also says that exchanges currently “have no reason to abide by U.S. statutes and regulations that prohibit manipulation, insider trading, dealing before customers, and other fraudulent behavior by customers or employees.”
He also thinks the SEC is currently unable to detect fraud in crypto exchanges.
“With traditional SEC-listed financial firms, the SEC has unrestricted and instantaneous visibility into every aspect of the company’s business. With crypto trading platforms, the SEC has no oversight and access of any kind — and little ability to detect, investigate, and deter fraudulent behavior.”
Crypto prices crashed across the board on Monday after news broke that the SEC had filed a lawsuit against global crypto exchange Binance and its CEO Changpeng Zhao. The regulator alleges that the exchange was in violation of investor protection and securities laws.
The SEC followed up on the Binance lawsuit by suing major US crypto exchange Coinbase on Tuesday, alleging the company operated as an unregistered stock exchange, broker and clearing house.
Don’t Miss Out – Subscribe to receive crypto email alerts delivered straight to your inbox
Check price action
follow us on TwitterFacebook and Telegram
Surf the Daily Hodl mix
Image generated: Midway through the journey